Scorpio Bulkers (SALT) Stock Falls After Pricing Public Offering

NEW YORK (TheStreet) -- Shares of Scorpio Bulkers (SALT) were falling 3.1% to $1.55 on heavy trading volume Thursday after the shipping company priced the 133 million shares of common stock in its public offering.

Scorpio Bulkers priced the 133 million shares of common stock in the public offering at $1.50 a share. The company said that Scorpio Services Holdings and certain executive officers agreed to buy an aggregate 10 million shares at the offering price.

The underwriters of the offering have a 30-day option to buy up to an additional 19.95 million common shares.

The offering is expected to close on June 16, 2015.

Scorpio Bulkers said it will use the proceeds from the offering for installments payments due under its Newbuilding Program, for general corporate purposes, and for working capital.

About 19.2 million shares of Scorpio Bulkers were traded by 10:19 a.m. Thursday, above the company's average trading volume of about 1.3 million shares a day.

TheStreet Ratings team rates SCORPIO BULKERS as a Sell with a ratings score of D-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SCORPIO BULKERS (SALT) a SELL. This is driven by several 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, 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 388.6% when compared to the same quarter one year ago, falling from -$10.66 million to -$52.07 million.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 73.56%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 275.00% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • SCORPIO BULKERS 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 year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, SCORPIO BULKERS reported poor results of -$0.81 versus -$0.03 in the prior year. This year, the market expects an improvement in earnings (-$0.47 versus -$0.81).
  • Compared to other companies in the Marine industry and the overall market, SCORPIO BULKERS's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to -$10.50 million or 33.80% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -12.98%.
  • You can view the full analysis from the report here: SALT Ratings Report

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