Dry-Bulk Shippers: Why They're Moving Onwards and Upwards

NEW YORK (TheStreet) -- Dry-bulk shipping stocks FreeSeas (FREE), Eagle Bulk (EGLE), DryShips (DRYS) and Navios Maritime (NM) enjoyed much-needed gains on Wednesday after tumbling since the beginning of the year.

By mid-morning, micro-cap Eagle Bulk led the pack, jumping 9.9% to $4.05. FreeSeas climbed 6.9% to $1.87, Navios Maritime added 2.6% to $9.49, and DryShips soared 3.8% to $3.82.

The industry was rallying after dry-bulk shipping rates climbed for the first time this year. The Baltic Dry Index, which measures activity along the world's major shipping routes, saw a four-point increase to 1,374.

Capesize shipping rates, the measure for vehicles which can carry 150,000 metric tons of cargo or higher, gained $280 to $13,168 a day.

TheStreet Ratings team rates NAVIOS MARITIME HOLDINGS INC as a Hold with a ratings score of C+. The team has this to say about their recommendation:

"We rate NAVIOS MARITIME HOLDINGS INC (NM) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, NM's share price has jumped by 157.71%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The revenue fell significantly faster than the industry average of 9.0%. Since the same quarter one year prior, revenues fell by 25.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Marine industry. The net income has significantly decreased by 381.8% when compared to the same quarter one year ago, falling from $4.63 million to -$13.05 million.
  • The gross profit margin for NAVIOS MARITIME HOLDINGS INC is currently lower than what is desirable, coming in at 28.98%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of -10.67% is significantly below that of the industry average.

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