Dahlman Rose Reiterates Its Buy On Safe Bulkers Following Recent Earnings Report

Safe Bulkers SB reported 1Q11 EPS of $0.41, just ahead of Dahlman Rose and consensus estimates of $0.38. Net voyage revenues of $42.3MM compared to its $40.8MM forecast and slightly lower than expected opex and G&A contributed to the beat. The company declared its regular $0.15 dividend, which represents a 7.4% yield at the current share price. Safe Bulkers continues to be one of the very few shipowners with the ability to pay out dividends because of its strong balance sheet. Safe Bulkers has secured time charters for 75% of its remaining 2011 operating days, compared to just above 50% for the peer group, and has contracted 59% of its 2012 operating days and 52% of its 2013 operating days. Safe Bulkers currently has one Capesize vessel in its fleet, which it has fixed on a long term time charter at $31,000/day until September and at $26,000/day for the remainder of the charter. Cash earnings per share was $0.50 per share in 1Q11 and 2011 CEPS is estimated at $1.93. Therefore, the $0.60 dividend is well-protected and the company's excess cash flow affords it flexibility as the dry bulk market remains pressured. Dahlman believes Safe Bulkers will continue to be very well-positioned in the coming years, despite a weak dry bulk market, and look for its shares to outperform. Dahlman Rose reiterates its Buy rating and $10 target. SB closed Tuesday at $8.10