The Russia-Ukraine war deepened worldwide logistical breakdowns, raising the demand for shipping. According to a Business World report, shipping costs may rise as much as 25% as oil prices continue to surge.
Since the need to smoothen international trade should drive the shipping industry’s growth, and companies in this space should benefit from rising prices, the sector should gain immense investor attention. Indeed, investors’ interest in the shipping industry is evident in the SonicShares Global Shipping ETF’s (BOAT) 10.6% returns over the past three months compared to SPDR S&P 500 Trust ETF’s (SPY) 4.4% decline.
Therefore, we think it could be wise to bet on Matson, Inc. (MATX) and A.P. Møller - Mærsk A/S (AMKBY), which are well-positioned to generate high ROI in the coming months because of their fundamental strength.
Matson, Inc. (MATX)
Headquartered in Honolulu, Hawaii, MATX, together with its subsidiaries, provides ocean transportation and logistical services. Its segments are Ocean Transportation and Logistics. The company serves the U.S. military, freight forwarders, retailers, consumer goods, automobile manufacturers, and other customers.
On Feb. 17, 2022, Chairman and CEO Matt Cox said, “Within Ocean Transportation, our China service continued to see significant demand for its expedited ocean services as volume for e-commerce, garments and other goods remained elevated. Continued strong demand for the China service was the primary driver of the increase in consolidated operating income year-over-year.”
For its fiscal fourth quarter, ended Dec. 31, 2021, MATX’s logistics revenue increased 54.4% year-over-year to $241.10 million. Its operating income came in at $14.80 million, up 54.2% year-over-year. Also, its net income was $394.50 million, up 360.9% year-over-year, while its EPS came in at $9.39, up 379.1% year-over-year.
Analysts expect MATX’s revenue to increase at 9.5% year-over-year to $4.30 billion in its fiscal 2022. Its EPS is expected to increase 53.6% to $26.11 in 2022. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 51.9% in price to close yesterday’s trading session at $92.87.
MATX’s strong fundamentals are reflected in its POWR Ratings system. The stock has an overall A rating, which indicates a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
MATX has an A grade for Growth and a B grade for Value, Momentum, and Quality. It is ranked #2 of 44 stocks in the B-rated Shipping industry. Click here to see the additional POWR Ratings for Stability and Sentiment for MATX.
A.P. Møller - Mærsk A/S (AMKBY)
Based in Copenhagen, Denmark, AMKBY operates worldwide as an integrated transport and logistics company. Its segments are Ocean; Logistics & Services; Terminals & Towage; and Manufacturing & Others.
On March 29, 2022, Kirby Corporation (KEX) announced an agreement for its wholly owned subsidiary, Kirby Offshore Wind, to provide barge transportation services for offshore wind towers and turbines to AMKBY. David Grzebinski, KEX’s President and CEO, said, “We have been carefully evaluating opportunities to enter the offshore wind industry for several years, and we are very pleased to partner with world-class operators such as Maersk, Equinor, and bp on a critical foundational project with a multi-year transportation agreement.”
AMKBY’s revenue increased 64.4% year-over-year to $18.51 billion for the fourth quarter, ended Dec.31, 2021. The company’s profit for the period came in at $6.11 billion, up 369.6% year-over-year, while its EBIT came in at $6.63 billion, up 316.2% year-over-year.
Analysts expect AMKBY’s revenue to be $19.39 billion for its fiscal period ending June 30, 2022, representing a 36.3% year-over-year rise. Over the past year, the stock has gained 22.3% in price to close yesterday’s trading session at $13.64.
It is no surprise that AMKBY has an overall A rating, which equates to a Strong Buy in our POWR Ratings system.
It has an A grade for Growth and Value and a B grade for Momentum and Quality. It is ranked first in the Shipping industry. Click here to see the additional POWR Ratings for Stability and Sentiment for AMKBY.
MATX shares were trading at $89.90 per share on Wednesday morning, down $2.97 (-3.20%). Year-to-date, MATX has gained 0.19%, versus a -5.84% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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