Paragon Shipping Inc.

Paragon Shipping is benefiting from the commodities boom as demand remains strong for its fleet of drybulk vessels. The company beat Wall Street estimates the last two quarters by an average of 21.33%. Paragon's 2008 forward P/E is only 9.16.

Full Analysis

Paragon Shipping Inc. (PRGN - Snapshot Report) is an international shipping company that transports drybulk cargoes. Headquartered in Greece, the company's current fleet consists of eleven vessels with a total carrying capacity of 706,358 dwt.

Paragon's vessels transport cargo worldwide. The Panamax drybulk carriers carry predominantly coal and iron ore as well as grain and a variety of other drybulk commodities. The Handymax drybulk carriers carry iron and steel products, fertilizers, minerals, forest products, ores, bauxite, alumina, cement and other construction materials.

On Mar 18, the company announced a new three year charter on one of its Panamax carriers, the Pearl Seas, at a daily rate of $51,300. The new charter rate is 66% above the vessel's current daily charter rate. Revenue from the charter is expected to be approximately $48.5 million over the three-year term.

Paragon Beats Estimates For the Fourth Quarter

On Feb 20, the company reported fourth-quarter estimates that beat Wall Street estimates by 38.10%. Net income was $7.7 million, or 29 cents per share, compared to net income of $0.5 million, or 14 cents per share. Analysts expected 21 cents per share.

Time charter revenue for the fourth quarter of 2007 was $30.4 million compared to $4.9 million in 2006. PRGN operated an average of 9.68 vessels during the fourth quarter of 2007, earning an average time charter equivalent rate of $35,284 per day compared to an average of 2.01 vessels during the fourth quarter of 2006, earning an average rate of $25,460 per day.

For the full year 2007, the company reported net income of $4.9 million, or 11 cents per share, compared to 2006 net income of $0.5 million, or 14 cents per share.

Paragon is Bullish on 2008

Paragon Shipping charters its vessels for periods ranging from one to three years. As of Feb 20, the company had fixed 93% of its available fleet days in 2008 and 50% in 2009. This represents expected contracted revenue from these charter agreements of 2007 of $127.5 million for 2008 and $70.0 million for 2009.

"Looking forward, we believe Paragon is well positioned to take advantage of a strong drybulk market, with secular market growth drivers and little exposure to the U.S. economy. The medium-to-longer term drivers of our industry remained unchanged, and during the coming months we will be in a position to take advantage of the high demand levels we've been seeing in the market as we seek to establish new time chartering contracts for some of our assets," said Michael Bodouroglou, Chairman and Chief Executive Officer.

"Our present liquidity position and strong balance sheet, in addition to our locked-in revenue for 2008, will allow us to expand our fleet further while maintaining our commitment to enhancing shareholder value," he said.

Analysts Estimates Rising for the Year in the Last 60 Days

Analysts' consensus estimates for the year rose by two cents to $1.84 from $1.82 per share in the last two months. For the first quarter, estimates remained unchanged at 41 cents a share.

The company focuses on maximizing shareholder value. In 2007, PRGN paid $2.35 per share to shareholders, including a special dividend of 60 cents per share prior to the completion of the company's IPO on Aug 15, 2007. Paragon's current dividend yield is 10.30%.

PRGN has a forward P/E of 9.16, under the industry average of 21.42. Its price-to-book of 1.58 is also under the industry average of 1.84.