In 2007, the U.S. and world economies faced an overly bullish climate that was being held up with toothpicks. Later that year, those weakened supports began to crack further before the entire collapse came in 2008. Industries across the board were hit hard and some still are struggling to recovery five years later. One of those industries that has had a tough time with its recovery is seaborne shippers. These companies were faced with record high oil prices in the summer of 2008 and as revenues fell off a cliff, expenses rose just as fast. This led to shippers cutting fleets and work staff. It was not until 2013 that the seaborne shipping industry really got back on its feet and confidence began returning. One such company that has seen the highs and lows is StealthGas, Inc. (NASDAQ: GASS).
Turning to the fundamentals, StealthGas has a market cap of $330.8 million and currently is rated a "buy" by analysts. Price to earnings comes in at 10.32 and forward price to earnings is at 8.64. Price earnings growth shows an overvalued 2.06, showing us that the industry still has some recovering to do. This is also seen with a price to sales of 2.76. However, the company trades below book value, with a price to book ratio of .71. StealthGas has a total debt to equity of .76 and registers cash per share of $2.99, giving the company a current ratio of 1.2. Earnings are expected to rise 244 percent this year, 67.37 percent next year, and 5 percent over the next five years. Management efficiency ratios could use some upgrading with a return on assets of 3 percent, return on equity of 5.8 percent, and return on investment of 5.7 percent. Margins, on the other hand, are quite decent with a gross margin of 59.1 percent, operating margin of 26.1 percent, and a profit margin of 19.6 percent. Shares of StealthGas are up 30.14 percent year-to-date.
Traditionally, StealthGas is not all that volatile compared to the broader market, as seen with a beta of .84. However, in late August, the company witnessed a severe drop from around $9.50 to below $6, before recovering to close around $8.50. Since then, the stock's price action has recovered and is currently riding an up trending wedge.
Another important fundamental metric is that institutional managers have been slowly picking up shares of StealthGas. In the past three months, institutional transactions are up almost 6 percent in favor of bullish positions. This brings the total float owned by institutional buyers up to 56.8 percent. Investors that are interested in the shipping industry and its potential strengthening recovery need to watch money managers and their posturing in the industry and this stock.
Remember the seaborne shipping industry is very sensitive to economic shocks and the price of oil. While the shipping of oil can help balance out the cost of fuel, shippers are also facing increased competition from other shipping methods such as railroads. Investors need to conduct their own research to determine whether or not entering in this stock and in the industry's recovery is right for their portfolio.