Updated Research Report on DryShips - Analyst Blog

On Jun 20, 2014, we issued an updated research report on DryShips Inc. DRYS.

DryShips has delivered negative earnings surprise in the last four quarters, with an average miss of 137.50%. The company reported lackluster financial results for the first quarter of 2014 with both the top and the bottom line missing the corresponding Zacks Consensus Estimate.

The drybulk shipping industry is cyclical in nature with volatility in charter hire rates and profitability. Moreover, future demand and supply of drybulk commodities are very difficult to predict. Several economic and geopolitical events can significantly affect demand, supply, price, and transportation of drybulk commodities within a short span of time. Moreover, the ongoing tension in Ukraine and Iraq may further drive fuel costs moving forward, thus affecting profitability and competitiveness of shipping companies in comparison to other companies engaged in truck or rail transportation.
    
The drybulk shipping industry is still not out of the woods. This is solely attributable to non-economic decisions taken by the shipping companies in 2008, just before the onset of worldwide recession. The sheer increase of vessels under operation resulted in intense price competition. Due to the lack of near-term foresight, most of the vessel operators had ordered large number of new build ships in several docks. Consequently, the glut of ships resulted in severe cut-throat price competition.

The main concern for DryShips is that a major portion of its shipping contracts are currently under volatile spot rate market. Such a wide exposure will definitely result in severe top-line fluctuations, going forward.

DryShips currently has a Zacks Rank #3 (Hold).


Stocks That Warrant a Look

Other better-ranked stocks in the shipping industry are Euroseas, Ltd. ESEA, Kirby Corporation KEX and Nordic American Tankers Limited NAT. All three stocks currently hold a Zacks Rank #2 (Buy).
 

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DRYSHIPS INC DRYS: Free Stock Analysis Report
 
EUROSEAS LTD ESEA: Free Stock Analysis Report
 
KIRBY CORP KEX: Free Stock Analysis Report
 
NORDIC AMERICAN NAT: Free Stock Analysis Report
 
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