The Q1 financial results of Star Bulk Carriers (SBLK.US) positively surprised analysts in terms of both earnings per share and revenue. Star Bulk is one of the world's largest operators of so-called dry bulk carriers, i.e. ships carrying dry commodities (steel, copper, grain, etc.) making the valuation of its shares strongly dependent on costs and freight demand (economic conditions).
Revenues: $224 million vs. $180 million forecast and $360 million in Q1 2022 (17% above exp.)
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Open account Try demo Download mobile app Download mobile appEarnings per share (EPS): $0.36 vs. $0.28 forecasts and $1.72 in Q1 2022 (29% above exp.)
Investors liked the news from management, which conveyed in a commentary that it is optimistic about the medium-term prospects for the dry bulk market, given the company's full order book and new environmental regulations. The biggest risk to the business is, of course, the recession.
- Star Bulk reported net income of $45.9 million in Q1, the company resolved a $0.35 quarterly dividend and a new share repurchase program of up to $50 million;
- In March and April, the company bought back a total of 531,000, treasury shares at prices of $21.12 and $20.74 per share. The current market price is hovering around $18;
- The company said that the repurchase enacted will take place at market prices, depending on valuation and the market situation;
- Star Bulk has returned nearly $1 billion to shareholders in dividends since the beginning of 2021. The pandemic period was particularly abundant and caused a rally in freight rates, which have been falling since 2022;
- The company generates much of its revenue by operating between Australia and China so positive momentum in the Chinese economy could potentially boost its profitability. On the other hand, however, the rebound in China has again become uncertain, following yesterday's disappointing macro readings.
- The company's study indicated that Star Bulk ships powered by green ammonia could carry iron ore from Australia to East Asia as early as 2028 and reach 5% of the total market by 2030.
The BDI index, which tracks freight prices on the world's 20 most popular sea lanes, has recently seen a slight correction after a robust rebound that began in December 2022. Source: Bloomberg
The company's commercial fleet. Star Bulk has ordered a total of 7 new vessels and plans to add 6 new vessels in 2024. The company will recover the full amount from insurance for the Star Pavlina ship, which was stranded in the Black Sea due to hostilities. Almost all of the company's ships are equipped with scrubbers, which reduce the cost of fuel consumed. Source: Star Bulk Carriers
StarBulk Carriers (SBLK.US) shares, D1 interval. A drop below the SMA200 and a head-and-shoulders formation, which may precede a drop below the neckline, which runs around $18 per share, look worrying on the company's stock chart. Source: xStation5
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