Camden

DryShips: Look Out for Those Forward PEs

For commenter Mark - Re: "If forward earnings ends up being 80% lower, which historically isn't a crazy notion at all if you look at a rate chart, "

Even if rates dropped 80% from where they are today DRYS forward earnings would drop anywhere near 80% because current rates are more than double the year ago rates and more importantly, the company hedged (locked-in) a large portion of it's contracts at the very high rates being offered in the fall (at the top of the spike).

If you think "... using forward PE is pretty silly given its forecast error range is so wide as to be near meaningless" then you must think there is no meaningful way for an analyst that follows DRYS to do his job (to forecast earnings). THAT'S silly.

DRYS: Shipper of the Global Commodities Boom

DSX Lover,

Your comment "George is a clown for bleeding the company's future for a stake in Ocean Rig" shows how little you know about business. George knows that the current rates are historically high and the there are a lot more ships headed to market in coming years. He knows the dry bulk business will be making less money a few years out. He is diversifying the company's assets into a business with a similar business model (the rental business) that is likely to have a strong earnings profile for many years to come.

Also, you say "There is no such thing as growth in earnings for 2008, 2007 was the peak year in rates..." Even if 2007 WAS the peak in rates it doesn't mean it will be the peak in earnings for Dryships. Even with the drop in the BDI, rates are currently much higher than than they were 12 months prior. Dryships will have a larger fleet (many more billed days) and Dryships put 35% of the fleet into long term charters back in October when rates had skyrocketed so that will be collected for the entire year. DRYS earnings WILL be higher in 2008 unless the DBI drops considerably from where it is today.