Why attractive leverage ratios get investors’ attention

Market Realist

Must-know: An overview of Nordic American Tankers (Part 6 of 6)

(Continued from Part 5)

Attractive leverage ratios

With a modest enterprise value (or EV) to earnings before interest, taxes, depreciation, and amortization (or EBITDA) for the current quarter and the next year, the company presents attractive opportunities for investors.

EV/EBITDA

Nordic American Tankers (NAT) is currently trading at an EV/EBITDA—2015E—valuation of 11.2, compared to current EV/EBITDA of 15.9. EV/EBITDA—2015E—for DHT Holdings Inc. (or DHT), Teekay Tankers Ltd. (TNK), Navios Maritime Acquisition (NNA), and Tsakos Energy Navigation Ltd. (TNP)  stands at 9.8, 10.5, 8.8, and 8.9, respectively. The Guggenheim Shipping ETF (SEA) tracks the shipping companies.

Meanwhile, the EV/EBITDA for the current quarter for DHT, TNK, NNA, and TNP stands at 11.2, 12.7, 9.5, and 10.2, respectively.

Leverage ratios

Compared to the industry average and industry peers, NAT trades at the lowest debt to equity and debt to assets ratio which exposes the company to minimal risk, but maximum shareholder returns.

Debt to equity and debt to assets ratio for NAT stands at 29.41 and 21.93, respectively. Meanwhile, DHT, TNK, NNA, and TNP record debt to equity of 54.8, 246.4, 252.7, and 123.7, respectively, compared to the industry average of 3,876.24.

Debt to assets ratio of DHT, TNK, NNA, and TNP stands at 34.9, 67.5, 69.5, and 53.22, respectively, compared to the industry average of 49.28.

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