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Euroseas (ESEA) – Smooth Sailing as Euroseas Rides The Tide of Higher Shipping Rates

Transportation
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Friday, August 12, 2022

Euroseas (ESEA)
Smooth Sailing as Euroseas Rides The Tide of Higher Shipping Rates

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.

Solid top-line growth. Euroseas reported 2022-2Q net revenues of $48.5 million up 165% over the same period last year and modestly ahead of our $44.8 million estimate. Higher results reflect vessel additions (1,487 voyage days versus 1,273) and higher shipping rates (TCE of $33,714 versus $14,853). Operating costs rose modestly. Adjusted EBITDA was $34.2 million up from $10.5 million and slightly above our $33.7 million estimate. Adjusted net income was $29.6 million ($4.08 per diluted) versus $7.6 million ($1.11) and our estimate of $28.8 million ($3.96).

Locked-in rates looking good as shipping rates decline. The company has locked-in rates for 98% of voyage days for the rest of 2022, 78% for 2023 and 54% for 2024. Average TCE rates are near $30,000, which is down from this quarter’s TCE rate but still high relative to historical rates. Eurosea’s largest exposure to spot rates comes largely from ships under construction that will be delivered in 2024. Eurosea’s fleet is getting younger and receives premium pricing. Euroseas locked in a TCE rate of $48,000 for two vessels to be delivered in 2023. High TCE rates should result in strong cash flow and earnings levels for the foreseeable future….

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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