Why DryShips (DRYS) Stock Continues To Climb Today

NEW YORK (TheStreet) -- Shares of DryShips Inc. (DRYS) are higher by 3.38% to $3.21 on Thursday as the stock continues to gain from yesterday's news its majority owned subsidiary Ocean Rig signed a drilling contract for the Eirik Raude, one of its semi-submersible drilling rigs.

The contract is for a minimum of six-well programs for drilling offshore the Falkland Islands, the company said.

The estimated drilling duration is expected to be about 260 days, with a backlog of approximately $165 million.

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The company said it expects the contract to begin during the 2015 first quarter.

Separately, TheStreet Ratings team rates DRYSHIPS INC as a Hold with a ratings score of C-. TheStreet Ratings 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 robust revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow."

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

  • The revenue growth greatly exceeded the industry average of 5.5%. Since the same quarter one year prior, revenues rose by 43.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 73.33% and other important driving factors, this stock has surged by 62.96% over the past year, outperforming the rise in the S&P 500 Index during the same period. 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 54.38%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -7.55% is in-line with the industry average.
  • Net operating cash flow has significantly decreased to $35.42 million or 66.68% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio is very high at 2.25 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, DRYS has a quick ratio of 0.52, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: DRYS Ratings Report
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