RECOMMENDATION We rate DIANA SHIPPING INC (DSX) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity. However, as a counter to these strengths, we find that the stock has had a generally disappointing performance in the past year. HIGHLIGHTS DSX's very impressive revenue growth greatly exceeded the industry average of 40.1%. Since the same quarter one year prior, revenues leaped by 78.1%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share. DSX's debt-to-equity ratio is very low at 0.22 and is currently below that of the industry average, implying that there has been very successful management of debt levels. DIANA SHIPPING INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DIANA SHIPPING INC increased its bottom line by earning $2.08 versus $0.80 in the prior year. This year, the market expects an improvement in earnings ($2.97 versus $2.08). The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Marine industry average, but is greater than that of the S&P 500. The net income increased by 14.3% when compared to the same quarter one year prior, going from $50.38 million to $57.59 million. Looking at the price performance of DSX's shares over the past 12 months, there is not much good news to report: the stock is down 68.08%, and it has underformed the S&P 500 Index. In addition, the company's earnings per share are lower today than the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.