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Genco Shipping & Trading Ltd. Message Board

  • killrbee99 killrbee99 May 7, 2011 7:50 AM Flag

    Q2 earnings estimate

    Predict Q2 to come in around $0.16 - $0.19 which is well below current estimates. This is based index linked charters with over 1 month in the books and FFA rates for the rest of Q2 flat to slightly declining with the exception of capes which may improve near 10K by end of Q.

    Interesting pop yesterday. Not likely sustainable with continued delining revenues and EPS due to boomtime charters rolling off. As Semper posted in a separate thread, If this thing reverts to historical industry PE of 7.5 or even a stretch at 10, its still overvalued.

    Still short 100 May $8 calls and may add some or roll into June $8 if the runup continues.

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    • show me the link for that threat. you liar. you got caught being manipulative by using two different alias' to bash.

      you posted your personal info. on a public message board that included your name and email.

      maybe you should grow up and stop playing games on so many boards. either your d#mb for posting that information (that's my guess) or u just like the attention.

      are u getting paid to do this? what gives?

    • This guy just had a TOS for harassment. Threatening me at home. He's angry and vindictive.

    • cmnae/ is the same person.

      the games children play just to deceive

    • Yes, I understand very well these accounting tricks with depreciation, i.e., as you showed, company can take “one-time” charge killing earnings big time in one quarter and then it has many quarters of “higher” earnings. However, it will not change cumulated earnings, and, moreover, as I said in preceding message, it doesn’t affect cash flow at all, and professional valuation is based on cash flow (discounted cash-flow model). In other words, these depreciation/book value tricks are good for Yahoo message board discussions usually going like this: you, moron, (‘moron’ in caps) don’t understand this; nope it’s you, fool, (‘fool’ in caps) don’t understand that, and so on. These discussions do not affect stock “fair value”.
      Regarding main factor affecting fair value here, it is debt, not even debt covenants linked to some ratios. Debt covenants are habitually waived by banks for ‘small fee’, at worst-case scenario; it’s often taken as non-event. At the same time, debt interest payments directly affect both earnings and cash flow. Moreover, debt principal repayments affect cash flow big time; earnings are not affected, but, as I mentioned above, it’s cash flow that defines professional valuation; i.e. I agree with you on this last point.

    • >>I don't think that "inflated" book value is directly linked to earnings<<

      Might I convince you otherwise?

      To keep this simple, assume GNK took a 33% write down in the value of its boats and that the reduction in depreciation was proportional, so apx $11m reduction in Q1 depreciation. There are apx 35m shares outstanding. Which means that a reduction in depreciation resulting from a 33% asset write down would have increased Q1 EPS by apx .31 share. Instead of reporting .38 GNK would have reported .69. Annualize that (x4) and use a "normal" multiple of 7 and GNK is magically a $19 stock!

      Given that EPS is projected to go to 0 or below in 2012, the depreciation charge could be significant - the difference between reporting a loss and positive EPS.

      There are, of course, those pesky financial covenants that would mitigate against a potential write down. But the depreciation number is as "bogus" a number as the asset values, which results in an understatement of EPS.

      >>any depreciation changes are non-cash and they shouldn't affect company valuations<<

      That depends on the valuations being used. See above. Also consider that P/E, TIE, ROA, ROE... they're all affected by the depreciation charge.

      For some businesses where depreciation is a small % of total operating expense, this would be no big deal. But for GNK - for many/most of the bulkers - depreciation is close to 1/2 of total operating expenses.

      >>I think that the main issue here, affecting valuation, is debt. <<

      Q1 (non-cash) depreciation is 1.5x interest expense, so the company could report negative earnings and still be able to make interest payments.

      That coverage may drop in Q2 due to lower spot rates and increased bunker prices (voyage expenses). Will be interesting to see.

      The killer is going to be debt repayments - particularly after 2012 when they double.

    • Good input. Truly, there will always be a dry bulk market and almost as truly there will always be a GNK and every dog has his day.

    • Never say never; it is stock market, anything may happen. However, industry statistics point to worsening rate conditions. If you are interested in numbers, you can find some of them in following transcript:
      Actually, some numbers from this conference call are used in Motley Fool article discussed today on dry-bulk boards, but it makes sense to check the original source, because Motley Fool reputation is not too high, imho.

    • Like GNK, BDI just bounced off a historic low. Is going on down? Not likely. It could. Wait and see. Asset valuation won't make any difference. BDI up, GNK up. BDI down, wait. It'll be up.

    • Gosh, simper, you almost sounded lucid and loosely relevant in my approach to investing/trading. By the way, it is real until it is changed. Don't kid yourself. The little guy with the clip board and the tables establishes the value of the asset.

      I really don't care. I will watch the published data and make my decisions with the visibility of the market's visibility. Not somebody's vision of how bad we're being lied to.

    • I am unsure if your reply was for me. I am bit older than 18, though it has nothing to do with this stock, or, better say, with this sector.
      It is a bit dangerous to keep things too simple, i.e. overlooking sector specifics. Simple glance over shipping rates (or BDI chart for, let say, last 12 months) should convince, unless you are in serious denial mode, that this sector is in big trouble.

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