i wish we could see some good news about GNK and shipping during the next couple of years but i find it unlikely due to the oversupply glut. The analysts keep being negative on the sector so this does not help.Money invested in shipping will be stagnant money for some years until 2013 but if you do not need it, then no problem at all.
i have few GNK and few SGOC.
SGOC made 0,79 $ eps in Q3 and they have made 1,28 $ eps for the nine months of 2010.
They will make about 2 $ eps for 2010.
SGOC is new and unknown.
Credit Suisse also supports their LCD and LED TVs and monitors sector.
we will see.
Winomaster wrote regarding low PE: "Most people say this occures when investors are giving zero credibility to present earnings and seeing little income on the horizon."
I think this is exactly the case, but it is taking time to be absorbed by everyone. Many thought that the somewhat healty rates of mid/late 2009 and early 2010 were an indication that the industry escaped the downside effects of the newbuild glut. The extreme situation in late 2008 & 2009 did buy some time with delays and some cancellations, but the reality is that this industry will be marginally profitable (at best for unleveraged shippers) for many years to come. Scrapping may offset some of the pain for the next year or two, but will not even remotely counter the supply demand imbalance. After that, the # of vessels of traditional scrapping age drops a lot.
So... The result, is likely that(assuming no dilution... which is a pipe dream), GNK will make about $2 in 2011 and less than $1 in 2012 even if rates improve 30%-40% from here, which is also unlikely. A forward PE of 13 based on 2012 earnings isn't so pathetically low, is it? You don't even want to hear about 2013... thats when the fun starts with probable negative earnings and $200M + in debt service payments due.
Bottom line, don't believe the analysts or the BS on the financial websites, do your own research.
"That's why I believe they will dilute on a massive scale to offset some of this debt service."
Seems like they are delaying this dilution move till the worst possible moment. Why wait till the stock price is so low? It only forces more and more dilution.
Incidently, I understand how earnings drive a stocks value. But the market can look past fading earnings to the day when GNK will be rolling over lease after lease in an unfavorable, ship glut situation. GNK already has an astoundingly low PE ratio. Most people say this occures when investors are giving zero credibility to present earnings and seeing little income on the horizon.
One sure way of loosing money is to be in crowd led by analysts. I believe that company earning money and the one that can earn in the future should not be estimated at 3 p/e. You can say this and that but you can not know the future.There is another thing - no company is 100% safe and if you are scared of everything-buy gold and hide it under your bed. I will take my chances in what I believe and if I am wrong so what I loose , just some money and not my life or health, so nothing important , will get some experience instead..If I am right so I will make some money and again some experience.We will see in 3-4 years who was right , it my be you and it may be me.
No major downward revisions in analysts estimates in recent times. No Shipping company came forward and expressed concerns about their business. Compared to the assets they own, the debt is not significant. Finally,the BDI is only a part of the story and a major part of the problem. It is like deciding the economy of America based on the taxi fares in Newyork city. It is as simple or as complicated as that. China is definitely playing a major role in this. They are probably looking to buy a few shipping companies by driving them down to desperation. If they are not doing it, we have no major issues other than market manipulation and buyer strike.
Where do you get this stuff....??
"No major downward revisions in analysts estimates in recent times."
GNK 2011 earnings lowered from $2.73 to $2.53 in just the last week. There will be more to come.
"Compared to the assets they own, the debt is not significant"
Value of all ships $1.8B and falling which is about equivalent to LT debt. Very little tangiible value in GNK. Values reported on Yahoo and other financial sites are pure BS
"China is definitely playing a major role in this. They are probably looking to buy a few shipping companies by driving them down to desperation.
You really have no idea how the Chinese hybrid capitalistic model works do you? They can build them cheaper and provide a jobs program, which is actually the largest motivating factor.
Well I agree China play major role in this. But decline in shipping stocks is only sideeffect. The main reason was to drive commodity prices down. In this particullar case they outsmarted themselves, no one could predict Australian flood. Now they are extremely low , especially in ore and coal.