We upgrade our recommendation on Excel Maritime Carriers Limited (EXM) to Neutral based on its current valuation, which plummeted 63.5% last year. This was primarily attributable to the gloomy prospects of the drybulk shipping industry. This sector is facing serious challenges since the spot vessel rates collapsed significantly. We believe the sole reason for this dismal condition is the sheer increase of newbuild ships under operation that resulted in intense price competition.
The spot rates of drybulk vessels have fallen to such a low level that even surging commodity prices in the Asian markets failed to offset the loss of the vessel owners. However, this low level of valuation may provide a cushion for further downslide of the stock price. Excel Maritime reported mixed financial results for the third quarter of 2011. Although net income was far below the Zacks Consensus Estimate, voyage revenue beats it handsomely.
The international shipping industry is responsible for the carriage of around 90% of world trade and is the life blood of the global economy. Without shipping, international trade, the bulk movement of raw materials, and the import/export of food and manufactured goods would be impossible. Excel Maritime has improved and consolidates the time charter contracts for its fleets. The company recently announced that it has secured under time charter employment of 94% of its operating days for the rest of 2011. The situation has markedly improved from 56% at the end of 2010.
As a leading global drybulk carrier, Excel Maritime is capitalizing on its established reputation for maintaining high standards of performance, reliability, and safety. Its main competitors are Diana Shipping Inc. (DSX), Genco Shipping & Trading Ltd. (GNK), and DryShips Inc. (DRYS).
DRYSHIPS INC (DRYS): Free Stock Analysis Report
DIANA SHIPPING (DSX): Free Stock Analysis Report
EXCEL MARITIME (EXM): Free Stock Analysis Report
GENCO SHPG&TRDG (GNK): Free Stock Analysis Report
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