The market is really looking forward right now, predicting the drop in earnings before it happens, so you don't see declining results hitting tankers yet. But the revenue pressure is on the horizon.
A high risk oil play
One thing that's difficult to assess with tanker companies right now is where their value lies. Looking at trailing earnings, Nordic American Tanker has a P/E ratio of 12.0, Frontline trades at 7.1 times earnings, and Teekay's P/E ratio is just 2.4. All of those look like great values, but will undoubtedly appear more expensive as earnings fall in the coming year.
For that reason, this is an industry I am steering clear of. It's just too difficult for any company to predict where supply and demand will land in any given year given the rapidly changing oil market. And unless global trade of oil picks up rapidly we could be in for years of oversupply in the tanker industry.
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