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.

TheStreet Ratings team rates EAGLE BULK SHIPPING INC as a Sell with a ratings score of D. The team has this to say about their recommendation:

"We rate EAGLE BULK SHIPPING INC (EGLE) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, unimpressive growth in net income, disappointing return on equity, poor profit margins and weak operating cash flow."

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

  • EAGLE BULK SHIPPING INC's earnings per share declined by 25.4% in the most recent quarter compared to the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, EAGLE BULK SHIPPING INC reported poor results of -$6.27 versus -$0.92 in the prior year. For the next year, the market is expecting a contraction of 21.3% in earnings (-$7.61 versus -$6.27).
  • 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 26.1% when compared to the same quarter one year ago, falling from -$29.84 million to -$37.63 million.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Marine industry and the overall market, EAGLE BULK SHIPPING INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for EAGLE BULK SHIPPING INC is rather low; currently it is at 23.16%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -96.53% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$1.86 million or 145.19% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

TheStreet Ratings team rates DRYSHIPS INC as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate DRYSHIPS INC (DRYS) 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 revenue growth, solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

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

  • DRYS's revenue growth has slightly outpaced the industry average of 9.0%. Since the same quarter one year prior, revenues rose by 17.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, DRYS's share price has jumped by 83.17%, 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 gross profit margin for DRYSHIPS INC is rather high; currently it is at 55.52%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -15.77% is in-line with the industry average.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Marine industry and the overall market, DRYSHIPS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $48.85 million or 40.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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