Blake Bos is bearish on DryShips (DRYS +0.00%) and here's why. The company generated about $113 million of earnings before interest, taxes, depreciation, or amortization in the first quarter, this can also be viewed as an approximation of operating cash flow. Of that, $56 million goes to interest expenses, and the remaining $57 million can be used for capital expenditures. Simply stated, $57 million for DryShips isn't going to cut it. This low level of cap ex crimps the company's ability to modernize its fleet with fuel-efficient ships, and that, in turn, puts DryShips at a competitive disadvantage. In fact, if you want to invest in a shipping company, a better alternative is Diana Shipping (DSX +3.03%), with a more modern and fuel-efficient fleet than DryShips.
This should be a major warning sign for DryShips investors.
About the Author
A home grown Kansan and largely self taught investor. I wouldn't classify myself by any particular investing style, just opportunistic. My dream investment would have a greater than 10% free cash flow return on enterprise value and be growing at above industry average rates. Some of my favorite industries to watch right now are: alternative energy, manufacturing, agriculture, infrastructure, and media content production companies. Follow me on any of the social media websites below for the most important 3D printing industry developments and other great stories.