Eagle Bulk Shipping: New Release.
Somehow I missed the earnings release for Eagle Bulk Shipping EGLE last week and I am sorry for the oversight. The company reported pretty impressive 1st quarter results (linked above) and continues to be the bulk shipping company I am most interested in. For the quarter, Eagle reported better numbers on every metric from a year earlier. Gains were due to a larger fleet and time charter rates that were steady from a year earlier. Here are a couple of positive notes from the conference call and press release:
- Eagle Bulk Shipping added two newbuild vessels to their operational fleet in the first quarter. The balance due was paid for out of free cash and the debt load did not increase.
- Of the 22 newbuild ships on order for 2009-2011, 19 have committed long term contracts, most with profit sharing.
- Eagle’s fleet of modern Supramax bulk carriers allow them to ship a broader range of commodities than the larger Capesize and Panamax bulk ships.
- Total daily breakeven cost is $11,100 per day, including interest expense. On May 6 the Baltic Supramax index was at 1430 and the conference call info put the daily spot rate then at $12,000 per day. Today (5/12) the BSI closed at 1639.
Management at Eagle Bulk Shipping puts out the best information on their conference call. They have a plan to grow their fleet, revenues and profits and right now things seem to be working according to plan. For the rest of 2009 the planned capex for new ships is $214 million. Free cash flow of $25 million per quarter plus an adequate credit line will allow continued growth that will be accretive to earnings.
Assuming the shipping rates stay at current levels or improve, EGLE should be a nice growth story for the next couple of years. If you project the 1st quarter’s 37ยข per share earnings for a full year, the shares are trading at a forward PE of about 5. EGLE looks like a pretty good value right now.
2 Comments
EGLE – Unfortunately, EGLE failed short term support on 5/11, the benchmark price that day was $7.40. EGLE also failed long term support 4/24, the benchmark price was $6.61. I expect that long term support would have been proven this week but alas, there has been heavy selling in the market. If the closing / opening price holds throughout the day/week, the confidence that Bulls are in control generally indicates a positive result.
It seems to me the EGLE price has held up well in comparison with many of the other shipping companies and market conditions of the past few days when indicator decay began market wide 5/7 through 5/11, even gold miners and probably soon gold will be coming off. The picture doesn’t look too pretty at the moment, but you are quite aware of how this market has been swinging wildly. Choice of good quality stocks is your best friend in tough times like these, those with pricey dividends are subject to disruption, as we have witnessed.
Good luck!
IMHO the two best dry bulk carriers are Navios (NM) and Dianna Shipping (DSX).