Eagle Bulk Shipping Inc’s (NASDAQ:EGLE): Eagle Bulk Shipping Inc., through its subsidiaries, engages in the ocean transportation of dry bulk cargoes worldwide. The US$446.07m market-cap company’s loss lessens since it announced a -US$43.80m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$32.68m, as it approaches breakeven. The most pressing concern for investors is EGLE’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for EGLE’s growth and when analysts expect the company to become profitable.
EGLE is bordering on breakeven, according to Shipping analysts. They anticipate the company to incur a final loss in 2017, before generating positive profits of US$16.70m in 2018. So, EGLE is predicted to breakeven approximately a few months from now. In order to meet this breakeven date, I calculated the rate at which EGLE must grow year-on-year. It turns out an average annual growth rate of 83.08% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, EGLE may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for EGLE given that this is a high-level summary, but, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing I would like to bring into light with EGLE is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in EGLE’s case is 69.33%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
This article is not intended to be a comprehensive analysis on EGLE, so if you are interested in understanding the company at a deeper level, take a look at EGLE’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should further research:
- Valuation: What is EGLE worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether EGLE is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Eagle Bulk Shipping’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.