Container shipping is not immune to the economic headwinds affecting the broader market. Moreover, the shipping market has seen heightened volatility in its rates due to sporadic COVID-19 lockdowns in China. However, the outlook on shipping remains bullish.
The shipping industry should enjoy increased demand as economic activities spruce up with the increase in global trade. Moreover, the Russia-Ukraine war has increased global vessel demand and shipping costs.
With the global cargo shipping market projected to grow at a CAGR of 2.5% to $13.19 billion tons in 2028, we think fundamentally sound shipping stocks Matson, Inc. (MATX), Grindrod Shipping Holdings Ltd. (GRIN), and Safe Bulkers, Inc. (SB) could be ideal investments now.
Matson, Inc. (MATX)
MATX provides ocean transportation and logistics services. The company operates through its Ocean Transportation and Logistics segments.
On June 22, MATX declared a third-quarter dividend of $0.31 per common share, payable on September 1. The dividend represents a 3.3% increase from the previous quarter. "This announcement marks the tenth consecutive annual increase to Matson's quarterly dividend, underscoring our Board's confidence in our long-term free cash flow growth," said Matt Cox, MATX's chairman and CEO.
MATX’s total operating revenue increased 63.7% year-over-year to $1.17 billion in the fiscal first quarter that ended March 31, 2022. Its operating income grew 259.9% from the year-ago value to $432.60 million.
The company’s net income increased 289% year-over-year to $339.20 million, while its EPS came in at $8.23, up 313.6% from the prior-year quarter.
The consensus EPS estimate of $9.38 for the quarter ended June 2022 represents a 152.8% year-over-year improvement. The consensus revenue estimate of $1.35 billion for the same quarter represents a 54.1% increase from the same period last year. MATX also beat the consensus EPS estimates in each of the trailing four quarters.
MATX has gained 29.9% over the past year and 16.4% over the past month to close the last trading session at $85.94.
MATX’s strong fundamentals are reflected in its POWR Ratings. The stock's overall A rating translates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MATX has a B grade in Growth, Momentum, Quality, and Value. It is ranked #3 of 44 stocks in the A-rated Shipping industry.
Beyond what is stated above, we’ve also rated MATX for Stability and Sentiment. Get all the MATX ratings here.
Grindrod Shipping Holdings Ltd. (GRIN)
GRIN, based in Singapore, is an international shipping company that owns, charters-in, and operates a fleet of dry bulk carriers and tankers worldwide.
On May 17, GRIN announced that it had entered into a contract to sell the 2016-built medium-range product tanker, Matuku, for $30 million. The company also exercised the purchase of IVS Pinehurst, a chartered-in 2015-built supramax bulk carrier, for an amount of $18 million. These developments might prove to be strategically beneficial for the company.
For the fiscal quarter that ended March 31, 2022, GRIN’s revenue increased 61.2% year-over-year to $110.29 million. Its adjusted EBITDA from continuing operations grew 137.1% from the year-ago value to $50.16 million.
Adjusted net income from continuing operations for the quarter stood at $29.83 million, reflecting a 1,119.3% increase year-over-year. Moreover, its adjusted EPS was $1.56, up 1,100% from the prior-year quarter.
Street expects GRIN’s revenue in the fiscal year ending December 2022 to come in at $508.40 million, indicating an increase of 11.5% year-over-year. Its EPS is expected to improve 12.6% year-over-year to $6.63. The company also surpassed the consensus EPS estimates in three of the four quarters.
GRIN’s shares have gained 68.7% over the past year and 17.2% over the past nine months to close the last trading session at $17.60.
GRIN’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system.
The company has an A grade in Sentiment and a B in Growth, Momentum, and Value. GRIN is ranked #5 in the same industry. To get GRIN’s ratings for Stability and Quality, click here.
Safe Bulkers, Inc. (SB)
SB, based in Monaco, provides marine dry bulk transportation services. The company owns and operates dry bulk vessels for transporting bulk cargoes, primarily coal, grain, and iron ore.
On May 31, 2022, SB announced that it had entered into an agreement to acquire two Chinese dry-bulk, 82,500 dwt, Kamsarmax class vessels. The company also has an outstanding order book of ten new build vessels scheduled to be delivered over the next three years. This should be strategically beneficial for the company.
In the same month, SB also announced its agreement to acquire a 2012-built, Chinese, dry-bulk, 176,000 dwt, Capesize class vessel, to be named MV Aghia Sofia, and expected to be delivered within August 2022. This is expected to be beneficial for the company’s revenue and profitability.
SB’s net revenues increased 24.3% year-over-year to $77.70 million in the fiscal first quarter of 2022. Its non-GAAP net income grew 93.4% from the year-ago value to $32.30 million, while its non-GAAP EBITDA improved 35.5% year-over-year to $46.90 million. Its non-GAAP EPS increased 71.4% from its year-ago value to $0.24.
Analysts expect SB’s EPS for the fiscal quarter ended June 2022 to come in at $0.31, indicating an increase of 0.2% year-over-year. Also, the company’s EPS is expected to grow 3% year-over-year to $1.30 in the ongoing fiscal year.
Over the past six months, the stock has gained 9.9% to close the last trading session at $3.67. The stock gained 7.9% over the past year.
It is no surprise that SB has an overall rating of B, equating to Buy in our POWR Ratings system. The stock also has a B grade in Value, Momentum, and Quality. SB is ranked #17 in the Shipping industry.
In addition to the POWR Rating grades I’ve just highlighted, you can see the SB’s ratings for Growth, Sentiment, and Stability here.
MATX shares were trading at $85.11 per share on Friday afternoon, down $0.83 (-0.97%). Year-to-date, MATX has declined -4.83%, versus a -16.10% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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