Shipping stock Seaspan is rising with Asian growth

After a wave of bankruptcies in the shipping industry, any shipping stock still afloat is likely to survive. Operating from Asia yields an advantage to the survivors based on proximity to the world’s fastest growing economies. Seaspan Corp. (SSW, quote) is a rising shipping stock where others have fallen.

Seaspan is a shipping stock pulling ahead of its competition.

Year to date, Seaspan, a Hong Kong-based shipping company, is up 17.28%. For the last six months it has risen 52.74%. The Guggenheim Shipping ETF (SEA, quote) has risen only 4.39% for 2012 and just 5.68% for the last half year of market action.

Seaspan recently surprised the analyst community with its first quarter results. Earnings per share for the first quarter were $0.30 when only $0.25 was expected. On a quarterly basis, sales growth is up by 25.70%. This furthers a long term trend as sales growth has risen 36.66% over the last five years.

But investors buy for the future earnings of a company. Earnings per share for the next five years are estimated to grow by 14.80% for Seaspan. Recent earnings per share growth has been negative, however.

Seaspan is a typical shipping stock with good and bad points, but the positive seems to outweigh the negative. The price-to-book ratio is 0.87, so the company is hardly overvalued. Both the gross margin and operating margin are very strong. Insider ownership is up too, which is a good sign. The short float is at 5.32%, which can be considered a troubling level, it is much lower than SEA’s short float of 8.84%.

Now trading around $15.60 a share, the mean analyst target price for Seaspan is $18.06. Barclay Capital recently set a target price range with a $20 ceiling. 

The five-year high for Seaspan was $37 back in 2007. It hit a low of under $7 a share in early 2009 alongside many other shipping stocks, so it has rebounded strongly from the nadir of the Great Recession. Until it recovers fully, a high dividend yield of 6.41% pays investors for the wait.

Leave a Reply