NEW YORK (TheStreet) -- Shares of Star Bulk Carriers (SBLK) were falling 11.1% to $3.35 on heavy trading volume Wednesday after the shipping company announced the pricing of the 56.25 million shares in its primary public offering.
Star Bulk Carriers priced the 56.25 in the public offering at $3.20 a share. The company expects the offering to close on May 18.
The shipping company said it plans to use the proceeds from the offer for its newbuilding program and for general corporate purposes including "additions to working capital, capital expenditures, repayment of debt or the financing of possible acquisitions and investments."
About 2.8 million shares of Star Bulk Carriers were traded by 12:48 p.m. Wednesday, above the company's average trading volume of about 389,000 shares a day.
TheStreet Ratings team rates STAR BULK CARRIERS CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate STAR BULK CARRIERS CORP (SBLK) 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 disappointing return on equity, poor profit margins, weak operating cash flow and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- 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, STAR BULK CARRIERS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for STAR BULK CARRIERS CORP is currently extremely low, coming in at 14.07%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 0.60% trails that of the industry average.
- Net operating cash flow has significantly decreased to -$2.82 million or 137.70% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- SBLK's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 68.78%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last 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.
- STAR BULK CARRIERS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, STAR BULK CARRIERS CORP turned its bottom line around by earning $0.35 versus -$58.31 in the prior year. For the next year, the market is expecting a contraction of 192.8% in earnings (-$0.33 versus $0.35).
- You can view the full analysis from the report here: SBLK Ratings Report