conservative payment is not simply determined by % of eps. NAT has less debt than peers and can prudently pay out more of its cash flow. Highly leveraged companies with big debt payments must deal with the possibility of a period of low rates, less income, but still debt to service. so highly leveraged companies should be holding back intheir payouts.
Thanks for the link to the explanation of TCE and spot market dynamics. The factors are indeed complex and I think NAT has a substantial advantage in owning suzies only.
What is your source for asserting that the shipping company pays for the operating fuel costs under a spot market lease?
shorter depreciation periods mean that you can deduct expenses quicker, actually increasing the net income.
"the depreciation period is also shortening from 5 to 2.5 years." some clarification please. there are many different depreciation schedules. : )
Its obvious that NAT has been severly overpriced for years. Mr. market just doesn't get it. Maybe its the dividends that confuse him. : )
According to a current article in the NYT, there is a constant threat of too little water to properly operate the canal at full depth. Thus, larger vessels will have to transit less than fully loaded. There is not simple formula which predicts to what extent this will happen. According to this article, there are alot of problems with the new canal.
Do you have a source or link to support your assertion " what every other person in the industry has repeatedly said regarding the age of ships. " ?
Orders can be and are often cancelled/delayed or the type of vessel ordered is changed when market conditions indicate. Note that NAT can maintain ships economically longer because its fleet is exclusively suzies and its maintenance operations are optimized for just that vessel.
Note that the new rates apply to VLCCs, not suzies. But a rate increase for suzies could be coming!
The relationship is not so simple. If West coast ports become available ports for suezies (versus unavailable) then the demand for suzies should increase, a positive. The losers could be smaller tankers who could utilize
the previous smaller canal but would now face new competition from larger, more efficient suzies than are canal-enabled.
your statement does not pass the smell test. Common sense says it is preposterous. Get outta here!
The company is not a growth company. It is a value company. If it were a growth company it would have the same problem Apple has: too big to grow much!