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Category: Stock Market and Nordic American Tankers
Date: 18 May 2020 Stock Price: $4.87 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Nordic American Tankers, a shipping company whose fleet has a capacity to ship 23 million barrels of crude oil
Our fleet consists of 23 well maintained Suezmax tankers with a cargo lifting capacity of 1 million barrels of crude oil each " |
About Nordic American Tankers
Nordic American Tankers Limited (“NAT”) was incorporated in Bermuda in 1995. In September 1995 NAT sold securities to the public in the US and in Europe. The shares are today trading at the New York Stock Exchange (“NYSE”).
Our fleet
Our fleet consists of 23 well maintained Suezmax tankers with a cargo lifting capacity of 1 million barrels of crude oil each day. We have a pure focus on the Suezmax market. We believe Suezmax vessels are more versatile and the one-million-barrel market offers more options in trading than the Very Large Crude Carriers (VLCC) with their two-million-barrel lifting capacity. The average age of our fleet is about 11.7 years; 10 units were built from 2010 onwards and 13 units were built between 2000 and 2009. We take extra care to maintain our vessels to the highest standards for the safety of crew, cargo and the environment. The outcome of the inspections of our ships by oil companies (“vetting”) reflects the good quality and maintenance of our fleet. NAT has one of the largest fleets of Suezmax tankers in the world. In a capital intensive industry like ours, careful maintenance of our existing fleet and the timing & financing of expansion are key elements to achieve a sound cost structure. All our vessels are running on IMO compliant fuel
Our fleet
Our fleet consists of 23 well maintained Suezmax tankers with a cargo lifting capacity of 1 million barrels of crude oil each day. We have a pure focus on the Suezmax market. We believe Suezmax vessels are more versatile and the one-million-barrel market offers more options in trading than the Very Large Crude Carriers (VLCC) with their two-million-barrel lifting capacity. The average age of our fleet is about 11.7 years; 10 units were built from 2010 onwards and 13 units were built between 2000 and 2009. We take extra care to maintain our vessels to the highest standards for the safety of crew, cargo and the environment. The outcome of the inspections of our ships by oil companies (“vetting”) reflects the good quality and maintenance of our fleet. NAT has one of the largest fleets of Suezmax tankers in the world. In a capital intensive industry like ours, careful maintenance of our existing fleet and the timing & financing of expansion are key elements to achieve a sound cost structure. All our vessels are running on IMO compliant fuel
Overview of Nordic American Tankers' 1st quarter 2020 earnings report
- Net Revenue: $86.179 million (up from $53.629 million for the same quarter of the previous year
- Revenue increased by 60.7% over the last 12 months
- Operating expenses: $38.548 million (up from $35.322 million for the same quarter of the previous year)
- Operating expenses increased by 9.1% over the last 12 months
- Net income: $39.549 million (up from $5.643 million for the same quarter of the previous year)
- Diluted earnings per share: $0.27 (down from $0.04 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 147.230 million (up from 141.969 million for the same quarter of the previous year)
- Cash and cash equivalents: $64.352 million
- Cash and cash equivalents per share: $0.43
- Cash and cash equivalents makes up 8.9% of Nordic American Tanker's market capital
- Cash and cash equivalents makes up 6.2% of Nordic American Tanker's total assets
- Vessels: $887.225 million
- Vessels makes up 85.6% of Nordic American Tanker's total assets
- Stockholders equity of Nordic American Tanker's: $603.712 million
- Stockholders equity per share for Nordic American Tanker $4.10
- So Nordic American Tanker's is trading at 118 times it stockholders equity per share which is well outside the expected range of between 2 and 4 times most companies tend to trade at.
- For some perspective the average price to book value that firms in the S&P 500 trade at is 3.7. Read more about the S&P 500 here
- Cash provided by operating activities: $35.868 million
- Cash provided by operating activities per share: $0.24
Nordic American Tankers' management commentary on their 1st quarter 2020 earnings
Nordic American Tankers Limited (NYSE: NAT) – Report for the first quarter 2020 – First quarter net operating earnings beat the full year 2019.
It is normal in the tanker business to meet with disruptions and unexpected events. We capitalize on such disruptions, which we expect will take place in the future too. Prospects for 2020/2021 are promising.
What is good for the world economy and world trade is by nature positive for the crude oil tanker business. A low oil price is good for the world economy and works as a stimulus for recovery after that last few months of virus lock-downs. We see encouraging signals of rapidly recovering Asian economies that bodes well for world economy and the tanker markets going forward. The ordering activity for new ships is muted and the orderbook in percent of the existing tanker fleet has not been lower in decades. This is one of the main reasons for the good tanker market we now are seeing and for our long term optimism. The world’s Suezmax fleet (excl. shuttle, product & Jones Act tankers) counted 521 vessels at the end of 2019. During the first quarter of 2020, 3 conventional Suezmax vessels were delivered from the shipyards. For the remainder of 2020 we expect to see a total of 16 additions to the world Suezmax fleet (excl. shuttle, product & Jones Act). We currently see 21 conventional Suezmax tankers scheduled for delivery in 2021 and 9 in 2022. The supply of tanker tonnage is inelastic in the short-term. When there are too many ships in an area, rates tend to go down. When there is scarcity of ships, rates tend to go up. Short-term spot tanker rates may be expected to be volatile.
It is normal in the tanker business to meet with disruptions and unexpected events. We capitalize on such disruptions, which we expect will take place in the future too. Prospects for 2020/2021 are promising.
What is good for the world economy and world trade is by nature positive for the crude oil tanker business. A low oil price is good for the world economy and works as a stimulus for recovery after that last few months of virus lock-downs. We see encouraging signals of rapidly recovering Asian economies that bodes well for world economy and the tanker markets going forward. The ordering activity for new ships is muted and the orderbook in percent of the existing tanker fleet has not been lower in decades. This is one of the main reasons for the good tanker market we now are seeing and for our long term optimism. The world’s Suezmax fleet (excl. shuttle, product & Jones Act tankers) counted 521 vessels at the end of 2019. During the first quarter of 2020, 3 conventional Suezmax vessels were delivered from the shipyards. For the remainder of 2020 we expect to see a total of 16 additions to the world Suezmax fleet (excl. shuttle, product & Jones Act). We currently see 21 conventional Suezmax tankers scheduled for delivery in 2021 and 9 in 2022. The supply of tanker tonnage is inelastic in the short-term. When there are too many ships in an area, rates tend to go down. When there is scarcity of ships, rates tend to go up. Short-term spot tanker rates may be expected to be volatile.
The NAT strategy is built on expanding and maintaining a homogenous and top quality fleet, leveraging on our industry network and close customer relationships with major oil companies. Employment of our ships with major oil companies is a priority. A strong balance sheet, combined with a homogenous fleet and economies of scale is giving a low cash break-even level, enabling NAT to distribute free cashflow to our shareholders. This strategy will be positive in a strong tanker market. In an improved market, higher dividends can be expected. Our dividend policy should continue to enable us to achieve a competitive cash yield. Our fleet of 23 more or less identical vessels is a special feature of NAT that is particularly valuable to our customers. NAT is firmly committed to protecting its underlying earnings and dividend potential. We shall safeguard and further strengthen this position in a deliberate, predictable and transparent way.
Nordic American Tankers (NYSE: NAT) stock price history
The image below, obtained from Google, shows the stock price history of Nordic American Tanker (NYSE:NAT) over the last 5 years. And it's been a horrible time for Nordic American Tanker stockholders. 5 years ago the stock was trading at around $12.90 and it is currently trading at $4.90 a stock. So over a 5 year period the stock of Nordic American Tanker declined by -62% .
The stock of Nordic American Tanker trading at closer to its 52 week low of $1.66 than it is to its 52 week high of $9, which to us is a clear indication that the short term sentiment and momentum towards Nordic American Tanker stock is negative at this point in time.
The stock of Nordic American Tanker trading at closer to its 52 week low of $1.66 than it is to its 52 week high of $9, which to us is a clear indication that the short term sentiment and momentum towards Nordic American Tanker stock is negative at this point in time.
Recent google search trends for NAT stock price
The graphic below shows the trend in google searches for NAT stock price over the last 12 months in the United States as obtained from Google Trends. And as it shows there was a significant spike in searches from the middle of April towards the end of April 2020.
Recent coverage of Nordic American Tankers
The extract below covers some of the most recent stock price movements of Nordic American Tanker as obtained from Finance.Yahoo.com
Nordic American Tankers (NAT) came out with quarterly earnings of $0.27 per share, beating the Zacks Consensus Estimate of $0.25 per share. This compares to earnings of $0.04 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 8%. A quarter ago, it was expected that this tanker company would post earnings of $0.17 per share when it actually produced earnings of $0.09, delivering a surprise of -47.06%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times. Nordic American Tankers, which belongs to the Zacks Transportation - Shipping industry, posted revenues of $86.18 million for the quarter ended March 2020, surpassing the Zacks Consensus Estimate by 5.97%. This compares to year-ago revenues of $53.63 million. The company has topped consensus revenue estimates just once over the last four quarters.
Read the full article here
Nordic American Tankers (NAT) came out with quarterly earnings of $0.27 per share, beating the Zacks Consensus Estimate of $0.25 per share. This compares to earnings of $0.04 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 8%. A quarter ago, it was expected that this tanker company would post earnings of $0.17 per share when it actually produced earnings of $0.09, delivering a surprise of -47.06%.
Over the last four quarters, the company has surpassed consensus EPS estimates two times. Nordic American Tankers, which belongs to the Zacks Transportation - Shipping industry, posted revenues of $86.18 million for the quarter ended March 2020, surpassing the Zacks Consensus Estimate by 5.97%. This compares to year-ago revenues of $53.63 million. The company has topped consensus revenue estimates just once over the last four quarters.
Read the full article here
Nordic American Tankers (NYSE: NAT) latest stock valuation
So what is Nordic American Tankers (NYSE: NAT) stock worth based on the release of their 1st quarter 2020 earnings report? Based on their earnings report our valuation models provide a target price (full value price) for Nordic American Tankers at $5.70 a stock. We therefore believe that the stock is undervalued.
We usually suggest long term investors look to enter a stock at least 10% below our target price (full value price) which in this case is $5.70. So a good entry point into Nordic American stock would be at $5.10 or below. Since the stock is trading at well below these levels we rate the stock of Nordic American Tankers as a speculative buy.
We usually suggest long term investors look to enter a stock at least 10% below our target price (full value price) which in this case is $5.70. So a good entry point into Nordic American stock would be at $5.10 or below. Since the stock is trading at well below these levels we rate the stock of Nordic American Tankers as a speculative buy.
Next earnings release of Nordic American Tankers
It is expected that Nordic American Tankers will release their 2nd quarter 2020 results towards mid August 2020