We maintain our long-term Neutral recommendation on
Excel Maritime Carriers Ltd.
) ahead of its third quarter fiscal 2012 financial results. The
company has delayed to declare its third quarter results.
Meanwhile, the stock price has plummeted over 80% over the last
year. This is primarily due to the bleak prospects of the drybulk
shipping industry. This sector has been facing serious challenges
ever since the spot vessel rates collapsed drastically.
Currently, Excel Maritime holds a short-term Zacks #3 Rank (Hold)
on the stock.
We attribute the dismal condition to a sheer increase in the
number of vessels under operation resulting in intense price
competition. The spot rates of drybulk vessels have fallen to
such a low level that even surging demand for commodities in the
Asian markets have failed to offset the losses incurred by the
vessel owners. Consequently, voyage revenue declined
significantly. However, we believe this low level of valuation
may provide a cushion for further downslide of the stock
The drybulk shipping industry is going through difficult
times. The financial condition of this industry is even worse
than what it was before the recession. This is mainly
attributable to the foolhardy decision taken by the shipping
companies in 2008, just before the beginning of the worldwide
recession. Due to a lack of near-term foresight, most of the
vessel operators had ordered a large number of newbuild ships in
Excel Maritime operates in a highly competitive drybulk
shipping industry. The company's main competitors are
Diana Shipping Inc.
& Trading Ltd.
DRYSHIPS INC (DRYS): Free Stock Analysis
DIANA SHIPPING (DSX): Free Stock Analysis
EXCEL MARITIME (EXM): Free Stock Analysis
GENCO SHPG&TRDG (GNK): Free Stock Analysis
To read this article on Zacks.com click here.