DryShips Earnings: Early Look

Earnings season is coming to an end and most companies have already released their quarterly results. But there are still a few companies left willing to report, and Dry ships will soon publish its quarterly financial results report. The key to making wise investment decisions when companies publish quarterly reports is to predict their behavior before they announce the results so you are fully prepared to react quickly to any inevitable surprises. This way, you’ll be less likely to have an unconscious, knee-jerk reaction to a message that turns out to be a completely wrong move.

DryShips has been hit particularly hard by the massive crisis in the shipping industry in recent years. However, the company’s deep-sea drilling activities helped save it from an even worse fate. Will shipping be restored in time to save DryShips? Let’s take an early look at what’s been going on with DryShips over the past quarter and what we’ll likely see in its quarterly report on Wednesday.

Statistics about DryShips

The analyst estimates EPS	($0.11)
EPS from a year ago	$0.06
Revenue estimate	$294.3 million
Change from previous year’s revenues	(10.3%)
The best earnings in the last 4 quarters	0

Source: Yahoo! Finances.

Will DryShips sink or swim this quarter?
Analysts have revised their estimates for DryShips in recent months, with the biggest change coming in their full-year 2013 consensus, which saw them reverse previous profit forecasts and now expect a small loss. In response, the company’s stock gave back almost all of its December and January gains, falling almost 20% in just the last month.

Tough times continue for dry bulk shippers as freight rates remain at rock-bottom levels due to overcapacity and weak conditions leading to reduced global trade. Disappointing report on the company’s results for the last month Genco Shipping highlighted industry weakness as Genco posted a larger-than-expected loss as the Baltic Dry Index continues to trade near multi-year lows. In particular, demand for goods was weak, which led to a reduction in global shipping of goods.

However, DryShips stands out from other competitors because it was penalized even more than many of its competitors. Based on cyclical adjustments, the company’s valuation is much lower than its competitive value Diana’s shipping trades despite similar challenges to Diana in space.

DryShips does not stand out in its internal management. In January he reached for it cushy $21 million to a contractor for taking delivery of two unfinished ships it ordered but no longer wants. As long as poor industry conditions persist, newly built ships will continue to generate little value for DryShips and its competitors, and the industry must stop building new ships for rates to stabilize.

The saving grace for DryShips was this Ocean platform subsidiary that took advantage of the growing demand for deepwater drillships. However, DryShips has been steadily selling off its remaining stake in Ocean Rig, and last month’s offering saw its stake fall below the 60% mark.

Look for DryShips in its quarterly report to share ideas on how it can save its struggling business. As the initial optimism about the industry at the start of the year has given way to more pessimism, DryShips must quell the bad sentiment before its stock sinks into deep ruin forever.

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The article DryShips Earnings: An Early Look originally appeared on Fool.com.

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