Stock Alert for DryShips Inc. (DRYS)
DryShips Inc. (DRYS) owns, through its subsidiaries, a fleet of 40 drybulk carriers comprised of seven Capesize, 29 Panamax, two Supramax and two newbuilding drybulk vessels, as well as two ultra-deep-water semi-submersible drilling rigs and two ultra-deep-water newbuilding drillships. The Company’s drybulk fleet carries a variety of drybulk commodities including coal, iron ore, and grains, bauxite, phosphate, fertilizers and steel products. DRYS employs its drybulk vessels under period time charters, on bareboat charters, in the spot charter market and in drybulk carrier pools. Its subsidiaries include Ocean Rig ASA, DrillShips Investment Inc. and Primelead Shareholders Inc.
The Company was founded in 2004 and is based in Athens, Greece.
| Share Statistics (Jul-30-10) | FY
2007 |
FY
2008 |
%
Chg |
Q4 2008 | Q4 2009 | %
Chg |
||
| Symbol | DRYS | Revenue, $Mn | 582.6M | 1.08B | 85.4% | 217.9M | 193.5M | 11.2% |
| Current price | $4.47 | Gross marg. | 93.3% | 86.2% | 7.6% | n/a | 72.7% | n/a |
| 52wk Range: | $7.99-3.28 | Oper. margin | 90.6% | -20.5% | 122.6% | n/a | 16.3% | n/a |
| Avg Vol (3m): | 12,200,400 | Net margin | 82.1% | -33.3% | 140.8% | n/a | 0.7% | n/a |
| Market Cap. | 1.27B | |||||||
| Shares Outst. | 294.8M | EPS, $ | 13.32 | -8.10 | 160.8% | -18.42 | -0.08 | 99.6% |
Source: Reuters.com, SEC Filings.
Financial Summary
Second Quarter 2010 Financial Highlights
- For the second quarter of 2010, the Company reported net income of $8.7 million, or $0.02 basic and diluted earnings per share. Included in the second quarter 2010 results are various items, totaling $71.7 million, or $0.28 per share, which are described below. Excluding these items, net income amounted to $80.4 million or $0.30 per share. Included in the second quarter 2010 results are non-cash amortization of debt issuance costs, including those relating to our convertible senior notes, totaling $7.9 million, or $0.03 per share. Included in the second quarter 2010 results are losses incurred on our interest rate swaps, amounting to $63.8 million, or $0.25 per share.
- Basic earnings per share for the second quarter of 2010 includes a non-cash accrual for the cumulative payment-in-kind dividends on the Series A Convertible Preferred Stock, amounting to $2.5 million, which reduces the income available to common shareholders. Basic earnings per share is calculated as net income less accrued dividends on preferred stock divided by weighted average number of common shares outstanding.
- The Company reported adjusted EBITDA of $152.3 million for the second quarter of 2010 as compared to $74.2 million in the same period in 2009. For the first half of 2010 adjusted EBITDA rose to $268.8 million compared to $24.5 million in the first half of 2009.
The Company recorded net income of $8.7 million, or $0.02 basic and diluted earnings per share, for the three-month period ended June 30, 2010, as compared to a net income of $51.5 million, or $0.24 basic and diluted earnings per share, for the three-month period ended June 30, 2009. Adjusted EBITDA, which is defined and reconciled later in this press release, was $152.3 million for the second quarter of 2010 as compared to $74.2 million for the same period in 2009.
Included in the second quarter 2010 results are various items totaling $71.7 million, or $0.28 per share, which are described at the beginning of this press release. Excluding these items, our adjusted net income amounts to $80.4 million, or $0.30 per share.
Basic earnings per share, as defined earlier in this press release, for the second quarter of 2010 includes a non-cash accrual for the cumulative payment-in-kind dividends on the Series A Convertible Preferred Stock, amounting to $2.5 million, which reduces the income available to common shareholders.
For the drybulk carrier segment, net voyage revenues (voyage revenues minus voyage expenses) increased by $8.9 million to $108.8 million for the three-month period ended June 30, 2010, as compared to $99.9 million for the three-month period ended June 30, 2009. For the offshore drilling segment, revenues from drilling contracts amounted to $109.0 million for the three-month period ended June 30, 2010, as compared to $100.6 million for the same period in 2009.
Total vessel and rig operating expenses and total depreciation and amortization decreased to $46.7 million and $48.3 million, respectively, for the three-month period ended June 30, 2010, from $51.4 million and $48.7 million, respectively, for the three-month period ended June 30, 2009. Total general and administrative expenses declined to $16.8 million in the second quarter of 2010 from $21.9 million during the comparative period in 2009.
Interest and finance costs, net of interest income, was relatively stable at $24.1 million for the three month period ended June 30, 2010, compared to $22.1 million for the three-month period ended June 30, 2009.
| Financial Strength (Jul-30-2010) | Company | Industry | Sector | S&P 500 |
| Quick Ratio (MRQ) | 0.54 | 1.11 | 1.43 | 0.72 |
| Current Ratio (MRQ) | 0.54 | 1.23 | 1.75 | 0.86 |
| Long-Term Debt to Equity(MRQ) | 38.01 | 110.58 | 62.11 | 112.21 |
| Total Debt to Equity (MRQ) | 94.41 | 133.05 | 88.06 | 176.42 |
Source: Reuters.com, SEC Filings.
Analyst Consensus
| Buy | Outperform | Hold | Underperform | Sell | No Opinion |
This is the consensus forecast among 14 polled investment analysts. Against the DryShips Inc company.
| Analyst Detail | Buy | Outperform | Hold | Underperform | Sell | No Opinion |
| Latest | 6 | 3 | 4 | 1 | 0 | 0 |
| 4 weeks ago | 6 | 3 | 4 | 1 | 0 | 1 |
| 2 months ago | 6 | 4 | 3 | 1 | 0 | 1 |
| 3 months ago | 6 | 4 | 3 | 1 | 0 | 1 |
| Last year | 0 | 1 | 8 | 1 | 3 | 1 |
The 13 analysts offering 12-month price targets for DRYS have a median target of 7.00, with a high estimate of 11.00 and a low estimate of 5.00. The median estimate represents a 53.17% increase from the last price of 4.57.
Source: www.ft.com
Consensus Estimates Analysis
| # of Estimates | Mean | High | Low | 1 Year Ago | |
| SALES (in millions) | |||||
| Quarter Ending Sep-10 | 8 | 218.11 | 222.80 | 209.54 | 225.93 |
| Quarter Ending Dec-10 | 8 | 219.05 | 229.23 | 209.24 | 234.02 |
| Year Ending Dec-10 | 15 | 815.08 | 870.08 | 426.40 | 875.77 |
| Year Ending Dec-11 | 14 | 1,104.53 | 1,348.00 | 435.90 | 1,095.69 |
| EARNINGS (per share) | |||||
| Quarter Ending Sep-10 | 9 | 0.20 | 0.26 | 0.11 | 0.26 |
| Quarter Ending Dec-10 | 9 | 0.20 | 0.26 | 0.10 | 0.26 |
| Year Ending Dec-10 | 14 | 0.77 | 0.97 | 0.31 | 0.86 |
| Year Ending Dec-11 | 14 | 0.99 | 1.83 | 0.23 | 1.80 |
| LT Growth Rate (%) | 1 | 18.00 | 18.00 | 18.00 | -50.00 |
Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=DRYS.O
Investment Highlights
DRYS announced recently that the Annual Meeting of Shareholders will be held at the Company’s offices located at 80 Kifissias Avenue, 15125, Amaroussion, Athens, Greece on Monday, September 6th, 2010, at 1:00 pm Athens time.
The board of directors has fixed the close of business on Monday, July 19, 2010, as the record date for the determination of the shareholders entitled to receive notice and to vote at the Annual Meeting or any adjournments or postponements thereof. Formal notice of the meeting and the Company’s proxy statement will be sent to stockholders of the Company in due course.
DRYS has been struggling to find charter contracts for at least two of the four brand new drillships that it’s set to take delivery of this year and next. Without inking agreements to hire out those vessels, the Company likely won’t be able to find the $1 billion in financing it still needs to pay for the new buildings. However, recent industry rumors have indicated that DRYS may issue high-yield bonds in order to raise at least some of the money.
Source: http://www.dryships.com
Technical Analysis
Source: http://stockcharts.com
DRYS is trading above its 13-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.
DRYS’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, DRYS is trading within its Bollinger Bands. This is a normal condition and suggests that the stock is neither overbought nor oversold relative to the recent price action.
The MACD for DRYS currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above zero, which implies that the underlying moving averages are trending higher.
Comparative Analysis
| Company Name | Ticker | Price per | Mrkt. Cap. | P/E | P/S | ||
| Jul-30-2010 | symbol | Share, $ | $ Mn | 2010 | 2011 | 2010 | 2011 |
| Dianan Shipping Inc. | DSX | 12.97 | 1.06B | 8.97 | n/a | 4.58 | n/a |
| Genco Chipping & Trading Ltd. | GNK | 16.87 | 538.45M | 3.77 | n/a | 1.44 | n/a |
| Navios Maritime Partners L.P. | NMM | 18.05 | 532.31M | 12.56 | n/a | 6.79 | n/a |
| Bulk Shipping Median | 710.25M | 8.37 | n/a | 4.27 | n/a | ||
| DryShips Inc. | DRYS | 4.48 | 1.27B | 11.06 | n/a | 1.63 | n/a |
Source: Thomson Financial
Insider Trading Activity
| NET SHARES PURCHASE ACTIVITY
Inside Purchases – Last 6 Months |
||
| Shares | Transaction | |
| Purchases | n/a | n/a |
| Sales | n/a | n/a |
| Net Shares Purchased (Sold) | n/a | n/a |
| Total Insider Shares Held | n/a | n/a |
| % Net Shares Purchased (Sold) | n/a | n/a |
| Net Institutional Purchases — Prior Qtr to Latest Qtr | |
| Shares | |
| Net Shares Purchased (Sold) | n/a |
| % Change in Institutional Shares Held | n/a |
Source: Yahoo Finance
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