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Collapsing Oil Price Leads To Excessive Sell-Off In Prosafe SE
- In light of the recent oil price collapse and fears of lower offshore exploration and development capex, the shares of Prosafe ended up being aggressively sold off.
- Panic selling was added by the high anticipated net debt levels on the back of new vessel deliveries.
- Selling was also supported by announced cut in dividend payout ratio to 25-35% in order to preserve cash flows.
Prosafe SE: A Global Market Leader Trading Under Book Value
- Prosafe, the global leader in the floatel industry, is trading at historically low fundamental metrics.
- The company is well positioned for a prolonged depression in oil prices with strong contract backlog ($2.2B) and a highly specialized fleet for evolving market demand towards deep water drilling.
- We estimate Prosafe's earnings power at $6.85 based on depressed 2010 revenue, and a replacement asset value of $5.18 - both significantly above the current trading price of $2.83.
Prosafe SE: Classic Value Opportunity For Long-Term Investor To Profit From Offshore Fleet Growth
- Operating earnings cushion through long-term contracts with near-record high backlog combined with capex investment program set to increase firm's assets by over 50% in the next 2 years.
- Selloff on the back of upcoming dividend cut offers opportunity for contrarian investors to profit from outflow of the dividend seeking group.
- Overreaction to short-term softness in operating environment offers additional value in light of long-term tailwinds for the sector.
Prosafe SE: Bullish Momentum To Continue For This 8% Dividend Yielder
- Prosafe SE, owner and operator semi-submersible accommodation vessels has surged by 22% in two months and this rally is likely to sustain.
- Prosafe offers investors a robust dividend yield of 8% (FY14 guidance) and the dividend is sustainable on a strong order backlog of $2.2 billion.
- Revenue growth and EPS growth will be aided by the delivery of two accommodation vessels in 2015 and two in 2016.
- Recent long-term contracts and contract extensions ensure that the next two year outlook remains positive and dividend keeps growing.
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