We upgrade our recommendation on
Excel Maritime Carriers Ltd.
) to Neutral based on its current valuation, which plummeted 71.4%
last year. This was primarily attributable to the gloomy prospects
of the drybulk shipping industry. This sector is facing serious
challenges since the spot vessel rates collapsed significantly.
We believe the sole reason for this dismal condition is the
sheer increase of newbuild ships under operation that resulted in
intense price competition. Excel Maritime operates under highly
competitive drybulk shipping industry. The company's main
Diana Shipping Inc.
& Trading Ltd.
The spot rates of drybulk vessels have fallen to such a low
level that even surging commodity prices in the Asian markets
failed to offset the loss of the vessel owners. However, this low
level of valuation may provide a cushion for further downslide of
the stock price. Excel Maritime reported mixed financial results
for the first quarter of 2012. Although net income was far below
the Zacks Consensus Estimate, voyage revenue beats it
Excel Maritime has improved and consolidated the time charter
contracts for its fleets.The company recently announced that it has
secured under time charter employment of 67% of its operating days
for 2012 for all the vessels in its fleet. Within these fleets,
which ensure a time charter contract, 27% have an upside potential
through profit sharing arrangements or index-linked structures and
hedge against downside price risk through floor protection.
Importantly, 100% of Excel Maritime's capesize vessels are also
under period charter agreement for 2012.
DRYSHIPS INC (DRYS): Free Stock Analysis Report
DIANA SHIPPING (DSX): Free Stock Analysis
EXCEL MARITIME (EXM): Free Stock Analysis
GENCO SHPG&TRDG (GNK): Free Stock Analysis
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