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Euroseas (ESEA) – The tide has turned but Euroseas is well protected

Industrials
0 min read


Tuesday, November 15, 2022

Euroseas Ltd. was formed on May 5, 2005 under the laws of the Republic of the Marshall Islands to consolidate the ship owning interests of the Pittas family of Athens, Greece, which has been in the shipping business over the past 140 years. Euroseas trades on the NASDAQ Capital Market under the ticker ESEA. Euroseas operates in the container shipping market. Euroseas’ operations are managed by Eurobulk Ltd., an ISO 9001:2008 and ISO 14001:2004 certified affiliated ship management company, which is responsible for the day-to-day commercial and technical management and operations of the vessels. Euroseas employs its vessels on spot and period charters and through pool arrangements.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Results rise on higher shipping rates and additional ships. Euroseas reported net revenues of $46 million for the quarter ended September 30, 2022 versus $23 million for the same period last year. Higher revenues reflect an increase in the TCE rate to $30,893 from $19,482 and the deployment of 18 vessels versus 14 last year. Results were a few million below our forecast as was adjusted net income of $20.9 million. The company continues to buck industry trends by holding the line on vessel costs per shipping day.

Euroseas is well protected from the recent sharp decline in shipping rates. Euroseas has locked in 99% of its shipping days for the rest of the year, 78% of 2023 shipping days, and 54% of 2024 shipping days. In fact it has even chartered three new builds to be delivered in 2023. Management indicated it is unlikely to lock in rates any time in the near future for the four ships to be delivered in 2024. While realized TCE rates will undoubtedly slip below $30,000 in upcoming quarters, the company will not face the sharp declines most other shippers will face.


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This Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision. 

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