Aegean Marine: Where Will the Stock Price Go?

After last quarter’s earnings report I put forth the opinion that Aegean Marine Petroleum Network (ANW) had a stock price somewhat high in relation to earnings growth. Since then the stock has fallen from the low $40s to the low $30s. I do not know if it was my astute analysis or just crappy market conditions.

For the 2nd quarter the numbers are starting to look a little better. Net income per share of 23¢ is 64% improvement on Q2, 2007 and a nice 28% improvement on Q1, 2008. The 23¢ is pretty much in line with the estimates but the $741 million in revenues blows away the consensus of $616 million.

Aegean Marine is in the process of building a global network of ship refueling facilities and bunker tankers. This is a fragmented industry where many single hull tankers will need to be taken out of service and ANW can pick up business with their modern, double hull fleet. The plans are to double the bunker tanker fleet over the next two years to a total of 52 ships. During the 2nd quarter Aegean Marine acquired a North American service center adding to its facilities in Europe, Asia and Africa. In this respect, the company is well on its way to developing a dominant, global network in the ship refueling industry.

The big question remains-  where the share price will go. Earnings projections for the next 6 quarters show year over year 100% increases for each quarter. The current share price is still a rich 42 times the last 4 quarters earnings, but if you believe the estimates only 14 times projected 2009 earnings. The question remains when earnings will actually start to ramp up and when to jump on the stock? A quarter ago, I recommended picking up the stock under $30. At this point, the current price may prove to be a good entry point. ANW is a component of this site’s  Opportunities Portfolio and I will continue to provide quarterly update on the stocks in the portfolio.

Note: I currently do not have a position in ANW.

Comments

[John C. Lee:]

I have ANW short due to the fact that its in a confirmed downtrend and the fact that it has failed the 200-day MA numerous times. A possible low-risk long entry may be around the $27.50 level, there ANW has tested several times.

2008 Aug 15 11:53 PM

[twinnkie:]

I bought anw last summer at 19.00 sold at 47.00 re bought at 32.00 2weeks ago. I dont see it going to 25 or 30 the entry point is now. This is going to be a 60-65 .
How about 100 in 3 years i dont know but i like it it going to be amazing.

2008 Aug 16 01:01 AM

[John C. Lee:]

Well, it did see $30 today! Realistically, the chart is entirely broken. In order for ANW to get to $60-65, it'll have to make 100% from here.

2008 Aug 19 12:24 PM

[jands0607:]

Do you think it would be a good idea to buy ANW now? As of Friday, October 17th, it is a 12.95. If so, how long do you think before we see it back at the 30 dollar range? Thanks for the adivce.

2008 Oct 18 01:09 AM