Back to top

Bear of the Day: Aegean Marine (ANW)

Read MoreHide Full Article

Aegean Marine Petroleum Network Inc. ANW has seen its earnings plunge in 2017. This Zacks Rank #5 (Strong Sell) is cutting costs and repositioning assets until the margins improve.

Aegean Marine Petroleum is an international marine fuel logistics company that markets and physically supplies refined marine fuel and lubricants to ships in port and at sea.

It buys product from various sources, including refineries, oil producers and traders, and resells it to customers across all major commercial shipping sectors and cruise lines.

A small cap company with a market cap of $188 million, Aegean has 51 delivery ports and 61 bunkering tankers.

Challenging Market Environment in Q3

On Nov 15, Aegean reported its third quarter results and met the Zacks Consensus Estimate of a loss of $0.10.

Even as parts of the oil industry saw improvement, the marine fuel sector remained under pressure with plenty of competition which led to margin pressures.

Gross spread per metric ton declined by 13.1%, to $14.60 from $16.80 in the second quarter.

It also didn't help that the company endured extreme weather in the quarter, including 3 major hurricanes, as well as a refinery fire which impacted procurement costs and sales volumes in some regions.

The company, however, continued with its cost cutting initiatives in the quarter.

For example, it withdrew from the loss-generating supply business in the Singapore market.

It also moved its U.S. West Coast storage operations to smaller facilities where capacity was a better match for actual utilization levels.

Additionally, Aegean rationalized its fleet operations in Gibraltar which should lead to better utilization and lower costs.

Looking ahead, for new business, it expanded into the Port of Savannah on the U.S. East Coast and intended to enhance its presence in St. Croix, one of the U.S. Virgin Islands.

Cost savings measures through October 2017 have yielded the company $24 million, well past its original $20 million goal. It was so encouraged by the savings that it increased its 2017 goal to $30 million.

Estimates Cut for 2017 and 2018

While the analysts were sympathetic to the market conditions, and liked the cost cutting strategy, they still cut both 2017 and 2018 estimates in the last 3 months.

The company made $1.35 in 2016 but the 2017 Zacks Consensus Estimate has fallen to just $0.01 from $0.32 just 90 days ago. That's a decline of 99% from 2016.

Earnings are expected to bounce back some in 2018, to $0.50, which would be an earnings recovery, but analysts had expected $0.75 as recently as 3 months ago.

Are Shares Cheap?

Shares of Aegean plunged in 2017.

Over the last year, they're down 55%.

But they're now off their lows and shares now trade with a forward P/E of just 9.1.

The company also pays a dividend, currently yielding 1.7%.

It's a tough time for all of those transports involved in shipping. Investors might want to consider one of the other transports outside of boats, such as a railroad.

CSX (CSX - Free Report) has already reported earnings and is expected to see double digit earnings growth in both 2018 and 2019. It's a Zacks Rank #3 (Hold).

Zacks Top 10 Stocks for 2018

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.

Access Zacks Top Ten Stocks for 2018 today >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

CSX Corporation (CSX) - free report >>

Aegean Marine Petroleum Network Inc. (ANWWQ) - free report >>

More from Zacks Bear of the Day

You May Like