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Excel Maritime Carriers Ltd. (EXM) is a shipping company specializing in the worldwide seaborne transportation of dry bulk cargoes. The company is expected to post fourth-quarter results in March. We are continuing our diluted EPS estimates at $4.45 for 2008 and $1.25 for 2009. These estimates reflect sharply lower spot market rates and declining trade patterns from China.
In the third quarter of 2008, EXM posted a 21% increase in diluted cash operating EPS to $1.16, below consensus of $1.62 our $1.31 estimate due to lower-than-expected revenue growth. Revenues advanced 240% year over year to $147 million, reflecting a 194% increase in fleet operating days (due to the Quintana acquisition) and a 15% gain in average TCE [time charter equivalent] rates.
While EXM recently increased the annual dividend by 100% to $1.60 per share, we cannot rule out a cut in the future to conserve capital. At its current price, the stock is trading at a substantial discount to the dry bulk peer group median P/E multiple based on 2009 consensus estimated earnings, price/sales, and price/book. We are maintaining our Hold on the stock, but raising our target price to $9.
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