Back to top

Analyst Blog

DryShips Inc. (DRYS - Analyst Report) reported disappointing financial results for the second quarter of 2012, which fell below the Zacks Consensus Estimates. The company’s legacy drybulk shipping cargo division and newly formed tanker division continues their pathetic performances.

The drybulk shipping and oil tanker segments are suffering from over supply of ships and tankers, which reduced spot rates significantly. Ongoing macro-economic uncertainty of the European region, slowdown of the Chinese industrial sector, volatility in oil prices, and high leverage ratio are major near-term concerns. 

Nevertheless, DryShips’ majority owned deepwater oil drilling unit OceanRig UDW Inc. (ORIG - Snapshot Report), is expected to boost the company’s top line going forward. Meanwhile, the stock price has dropped more than 35% in the last year. We, thus, reiterate our long-term Neutral recommendation on DryShips.

DryShips has a substantial portion of its fleet fixed under its time charter contract, locking in sizeable cash flows that enhance the stability of its earnings base. Management declared that 44% of drybulk fleets are fixed at $27,400 per day for 2012. The company continues with its fleet renewal and expansion strategy in the drybulk sector, replacing older tonnage with newer and larger vessels.

We expect the ongoing strong demand for drybulk trade to continue in the near future buoyed by healthy demand for iron ore and coal from China. Growing production of steel and electricity in China will sustain its import demand for iron ore and coal.

Currently, China accounts for 60% of global iron ore utilization and facilitates around 35% of the global dry-bulk shipping trade. Aprt from China, India has also become a major importer of drybulk goods, such as coal. The demand for drybulk shipping will continue to keep its momentum in 2012 mainly due to China and India. 

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
ERBA DIAGNO… ERB 3.70 +4.23%
BANCO DO BR… BDORY 14.49 +3.87%
WEATHERFORD… WFT 23.74 +3.53%
MALLINCKROD… MNK 78.45 +3.29%
AIR INDUSTR… AIRI 9.89 +3.13%