GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Dryships: Continues To Be In Troubled Waters

August 23, 2014 | About:
mitu77

mitu77

1 followers

Notwithstanding the constant pitiless settle in the shipping business and a dull tanker market execution over the first quarter of the years, ship directors from Hellas and around the globe have extended their hypotheses in both the new-constructing, and the auxiliary markets. Charming assessing together with financing availability have represented such decisions by vessel holders, who are looking to place their associations at an important position, in reckoning of a business area recovery DryShips(DRYS) is one of the largest shipping company and is considered to be the leading player in the shipping sector. But, an investor is more considered for his investment

The stocks for the organization has fallen steeply an unstable circumstance. Dryships recently released its second-quarter results simply, and it was blended as the company just managed to beat the consensus revenue estimate yet slipped on bottom line estimate.

Dryships' aggregate quarterly income came in at $405 million, a hop of about 18% as contrasted with the relating quarter of the past year, effectively beating the consensus estimate of $343 million. On the profit front, Dryships' execution was somewhat frustrating as the organization's misfortunes rose from $51 million to $64 million year-over-year.

Altogether, Dryships reported an income of $130.9 million, however there was $149.0 million in working benefit from Ocean Rig. Since the Ocean Rig commitment was considerably higher than the aggregate income, this implies the shipping business really had a $18.1 million operating loss and was like a financial load to Dryships - not a benefit. The $18.1 million working loss in the shipping business was much more awful than the first quarter results, when Dryships shipping operations posted a $4.7 million operating loss.

Failing to reduce debt

Dryships has about multiplied in 2013 because of good faith that the organization is decently situated to gain by the late restoration in transportation rates. Notwithstanding, I don't believe that the trek in transportation rates will help Dryships produce enough cash to counterbalance its colossal debt, and it is one of the essential reasons why Investors may not be so keen on investing in this company.

Proceeding onward to the shipping business, Dryships reported $13.4 million in EBITDA for this segment. Nonetheless, the organization has used more than $33 million in clearing debts. Thus, it is apparent that Dryships is not producing enough cash to stay aware of its debts, and will need to triple its profit simply stay keeping pace with the debt payments. Accordingly, it will be ridiculous to expect that the late restoration in transportation rates will turn around the organization's fortunes.

Ocean rig saga

Numerous experts and financial specialists are of the notion that Dryships' budgetary circumstance will enhance due to drilling operations which it gives through its somewhat possessed subsidiary, Ocean Rig. Quarterly incomes from drilling assignment hopped 15% from a year ago to $328 million, and despite the fact that Dryships possesses a 59% stake in Ocean Rig, it has no power over the capital and assets of Ocean Rig. Thus, investors shouldn't accept that Ocean Rig's request build-up worth $5.8 will profit Dryships in any capacity.

Give me a chance to get to the point: the non-Ocean-Rig organizations that Dryships own are money and profit empty on the organization and have been for quite some time. Dryships has constantly weakened shareholders and sold shares of its Ocean Rig with a specific end goal to keep this delivery business alive and keeping on blazing cash. With the most recent profit report, I see no indications of that stopping.

Conclusion

There may be some who would be anticipating that Dryships will improve later on. The stock has run up near 100% not long from now on speculators' hopefulness; however raw numbers are against it. Dryships has accomplished a stay of execution however not a stay of breaking down results. There will must be major industry wide changes only for Dryships' delivery business to turn productive without taking into consideration fabricate genuine, enduring shareholder value. A tremendous obligation load, poor money position, and poor administration choices are some great reasons why investors can consider not boarding this Ship.


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK