Dry Bulk Shippers: The Rebound Begins

This was one of my big picture items for 2008 listed in the January 2 Post, in fact, it was the first first bullet point under the first theme. Click here to check out all those big picture thoughts.

• More Consolidation Coming. This was one of my beginning of the year themes– insert link and in the wake of the EXM/QMAR merger industry executives see more mergers on the horizon which appears to be dragging up the valuations of the smaller players.

• Rates Have Rebounded Sharply. We thought this would happen as we approached the Chinese New Year on Feb 8 and it did, with a pronounced V-shape. Click here to see the latest move in shipper rates.

Earnings For The Big Bulkers Begin This Week. (DRYS) and (QMAR) on Thursday, (DSX) on Friday.

click to enlarge

Key Points of the above table: These data are compared to 1/10/08 which is when I started to warm back up to the group after its year end beheading.

1) After a rather heterogeneous rebound in the group, current size leader and spot market levered leader (DRYS) remains the cheapest game in town on current year earnings.

2) Earnings estimates have slowed to a crawl and in some cases reversed a bit.

Comments

[CrossProfit_:]

Agree with DRYS being the most attractive of the lot for now.
See www.crossprofit.com/vi...

CrossProfit

2008 Feb 14 01:10 PM

[Gaucho:]

Look at drys beat earnings est of 4.08 with 4.50. That puts it forward PE ration at 4.7. That is an insane number. The shipping rates are rising and the BDI is up yet again today. This stock should be selling @ 130 not 85

2008 Feb 15 10:03 AM

[sliman:]

Any ideas about the smaller players? Is it a buying opportunity on DSX (DIANA) because of their earnings miss?

2008 Feb 15 11:03 AM

[TIRED:]

DSX IS BEST BUY OF ALL I BUY MORE AT THIS PRICE GREAT BUY AND DIVIDEND IS VERY GOOD IT IS TIME TO BUY DSX

2008 Feb 18 03:38 PM