Why Diana Containerships (DCIX) Stock Hit a One-Year Low Today

NEW YORK (TheStreet) -- Diana Containerships  (DCIX) plunged to a one-year low of $3.15 on Tuesday after the shipping transportation services provider announced it reduced its quarterly dividend by 67% to 5 cents a share from 15 cents a share for the first quarter of 2014.

The cash dividend will be payable on or around June 11, 2014 to all shareholders of record as of May 28, 2014.

"After carefully considering the current containership charter market and vessel acquisition opportunities, management believes the board's decision to reduce the cash dividend payable with respect to the first quarter is in the best interests of the Company and its shareholders and is consistent with the long-term strategy of maintaining a strong balance sheet and pursuing attractive vessel purchase opportunities as they arise," the company said in a statement.

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"In taking this action, the company expects to deploy its available cash to purchase additional containership vessels at currently attractive prices that will further enhance the company's position to capitalize on the eventual recovery in the container market. The company believes this action enhances long-term shareholder value and will evaluate future dividend decisions in light of then prevailing market conditions."

Diana Containerships also reported earnings of 1 cent a share, in line with the Capital IQ Consensus Estimate of a penny a share. Revenues declined 10.6% year over year to $13.5 million, which surpassed the consensus estimate of $12.99 million.

The stock was down 14.56% to $3.17 at 12:32 p.m.

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Separately, TheStreet Ratings team rates DIANA CONTAINERSHIPS INC as a "sell" with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate DIANA CONTAINERSHIPS INC (DCIX) a SELL. This is driven by a few notable 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 deteriorating net income, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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

  • 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 7400.4% when compared to the same quarter one year ago, falling from $0.27 million to -$19.78 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Marine industry and the overall market, DIANA CONTAINERSHIPS INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.07%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 5900.00% compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
  • DIANA CONTAINERSHIPS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, DIANA CONTAINERSHIPS INC swung to a loss, reporting -$1.75 versus $0.24 in the prior year. This year, the market expects an improvement in earnings ($0.02 versus -$1.75).
  • DCIX's debt-to-equity ratio of 0.90 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 5.35 is very high and demonstrates very strong liquidity.
  • You can view the full analysis from the report here: DCIX Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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