"That is, if its second-quarter earnings report doesn't do the job for you already. Revenues were down 31% year over year to $51.5 million and net income dropped 72% to $12.1 million. Time charter equivalent rates, a standard industry measure, slipped from $34,691 last year to $20,603 this quarter. The Capesize class of ships time charter rates dropped from $59,052 to $31,829 year over year."
For clarity's sake, it might be well to note that the above was a quote regarding the earnings of DRYS, not GMR.
A quote from GMR's most recent 10Q perhaps casts a slightly different light on the picture:
Voyage revenues decreased by $59.5 million, or 43.9%, to $76.0 million for the three months ended June 30, 2006 compared to $135.5 million for the prior year period. This decrease is primarily due to a 52.5% reduction in vessel operating days to 1,727 days for the three months ended June 30, 2006 from 3,633 days for the prior year period. During the three months ended June 30, 2006, the average size of our fleet decreased by 53.3% to 20.1 vessels (12.1 Aframax, 8.0 Suezmax) during 2006 compared to 43.0 vessels (26.0 Aframax, 17.0 Suezmax) during the prior year period.
So, as you can see, the lion's share of the drop in revenues for GMR was due to having sold off 53% of their fleet.
While I am certain that the Baltic Dry Index (BDI) would be somewhat different in rate structure than a corresponding index for crude transport rates, I suspect that the overall trends for each might mirror each other more times than not as sea-going transport is, after all, sea-going transport whether liquid or dry.
Here is a chart I found on the BDI which indicates (to me at least) that freight rates bottomed and have headed back up:
dryships.com
The other article you linked was for OSG. The current metrics for DRYS are such that they are carrying too much debt and too little free cash flow for my taste. OSG is carrying more debt than GMR, pays a lower dividend, and has lower free cash flow as a percentage of current price. While OSG is selling at a price to book of 1.2 vs. GMR's 1.5, I think for my taste the other metrics outweigh in favor of GMR being the pick out of those three.
But then there are always factors I fail to fully appreciate, including how truly limited my vision and "insights" can be and are most days.
Timba |
