Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside* |
|---|---|---|---|---|---|---|---|
| 12 Mar, 25 | SBLK | Buy | USD 15.79 | USD 16.8 | USD 17.5 | 41 days | 10.8% |
*Potential Upside (%) indicates the expected percentage increase from the Entry Price to the Target 2 Price.
Data Powered by EOD Historical Data (“EODHD”).
Star Bulk Carriers Corp., a shipping company, engages in the ocean transportation of dry bulk cargoes worldwide. Its vessels transport a range of bulk commodities, including iron ores, minerals and grains, bauxite, fertilizers, and steel products. As of December 31, 2023, the company owned a fleet of 116 dry bulk vessels with combined carrying capacity of 13.1 million deadweight tonnage (dwt) consisting of Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax, and Supramax vessels with carrying capacities between 53,489 dwt and 209,537 dwt. Star Bulk Carriers Corp. was incorporated in 2006 and is based in Marousi, Greece.
Increase in Net Income – Star Bulk's net income rose from $43.7 million in Q3 2023 to $81.3 million in Q3 2024, marking an 86% increase, which reflects strong financial performance.
Higher Dividend Payout – The company declared a quarterly dividend of $0.60 per share, demonstrating a commitment to returning value to shareholders.
Remaining Share Repurchase Budget – With only $28.9 million left under the current share repurchase program, the company has limited capacity for further buybacks without additional authorization.
Share Repurchases Reducing Cash Reserves – The company spent $19.23 million on share repurchases in September 2024, reducing available cash that could be allocated to other strategic investments.
Key investment risks for Star Bulk include fluctuations in freight rates, high capital expenditures, potential volatility in dividend payouts, and limited remaining capacity for share repurchases, which could impact shareholder returns and financial flexibility
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 15.79 | 14.5 | 16.8 | 17.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Financial Performance Overview
Star Bulk reported a net income of $81.3 million for the third quarter of 2024, reflecting a significant increase from the $43.7 million recorded in the third quarter of 2023. Adjusted net income for the same period stood at $82.7 million, compared to $33.1 million in the prior year’s quarter. Earnings per share on a diluted basis were $0.69, an increase from $0.45 in the third quarter of 2023. The company’s voyage revenues surged to $344.3 million from $223.1 million in the previous year, primarily driven by fleet expansion and improved charter rates. Time Charter Equivalent (TCE) revenues also grew to $256.9 million, up from $162.5 million in the third quarter of 2023, while the TCE rate increased to $18,843 from $15,068, indicating a stronger market environment.
Operational and Fleet Developments
The company’s average fleet size increased to 155.3 vessels in the third quarter of 2024, compared to 121.5 vessels in the same period of 2023. Charter-in hire expenses rose to $14.8 million from $4.2 million, reflecting an increase in charter-in days. Vessel operating expenses grew to $75.5 million from $54.9 million, with daily operating expenses per vessel reaching $5,287, compared to $4,914 in the prior year. The increase in expenses was attributed to the acquisition of the Eagle fleet and its higher operational costs. Additionally, dry-docking expenses amounted to $20.1 million, up from $11.6 million in the third quarter of 2023, as fourteen vessels completed their scheduled maintenance.
General and Administrative Costs
General and administrative expenses for the third quarter of 2024 increased to $21.6 million from $13.6 million in the same quarter of 2023, inclusive of $7.6 million in share-based compensation. Vessel management fees rose to $5.0 million from $4.3 million, while daily net cash general and administrative (G&A) expenses per vessel were reported at $1,262, compared to $1,024 in the third quarter of 2023. The company anticipates further cost optimizations resulting from the Eagle merger in the coming quarters. Depreciation expenses also increased to $44.5 million, reflecting the expansion of the fleet.
Capital Allocation and Shareholder Returns
Consistent with its capital allocation strategy, Star Bulk declared a dividend of $0.60 per share for the third quarter of 2024, payable on December 18, 2024. Since early 2021, the company has distributed over $1.33 billion in operational free cash flow after debt servicing through 15 consecutive dividend payments. Additionally, the company repurchased 933,004 common shares in September 2024 at an average price of $20.61 per share, amounting to a total expenditure of $19.23 million under its ongoing $50 million share repurchase program.
Financing and Debt Management
Star Bulk has secured a new $130 million debt facility to finance the delivery of five Kamsarmax newbuilding vessels, expected to be delivered between the fourth quarter of 2025 and the first half of 2026. As part of its financing strategy, the company has also made debt prepayments of approximately $16.47 million related to recent vessel sales. Moreover, an existing $97.5 million facility secured by six vessels matured in October 2024 and was fully repaid, freeing the respective vessels from encumbrances. As of the date of this release, the company has nine unencumbered vessels.
Market Outlook and Strategic Positioning
Star Bulk remains optimistic about the dry bulk market’s medium-term prospects, citing favorable supply conditions, stricter environmental regulations, and economic stimulus measures in China. The company continues to focus on fleet optimization and cost efficiencies following the integration of Eagle Bulk. Additionally, through the strategic management of its scrubber-fitted fleet, Star Bulk aims to capitalize on market opportunities while mitigating risks associated with geopolitical uncertainties.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given on Star Bulk Carriers Corp (NASDAQ: SBLK) at the closing market price of USD 15.79 , as on March 11, 2025.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Industrials Industry: Marine Shipping
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| SBLK Star Bulk Carriers Corp |
0.54 3.98% | 14.10 | 12.25 | 5.78 | 2.76 | 1.58 | 3.85 | 8.92 |
| CICOY COSCO SHIPPING Holdings Co Ltd ADR |
- -% | 7.19 | 4.54 | 5.81 | 0.15 | 0.79 | 0.54 | 2.00 |
| CICOF COSCO SHIPPING Holdings Co. Ltd |
- -% | 1.45 | 4.65 | 5.66 | 0.14 | 0.78 | 0.54 | 2.02 |
| AMKBF A.P. Møller - Mærsk A/S |
- -% | 1556.96 | 7.17 | 35.46 | 0.51 | 0.47 | 0.70 | 2.73 |
| AMKAF AP Moeller - Maersk A/S A |
- -% | 1608.00 | 6.77 | 33.44 | 0.51 | 0.45 | 0.70 | 2.61 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is March 11,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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