Will Navios Maritime Holdings Outsail Diana Shipping and DryShips?

Navios Maritime Holdings (NYSE: NM) will release its quarterly report on Monday, and shareholders are hoping to see solid results from the company that sits atop the Navios empire. Yet, with DryShips (DRYS) having given its shareholders fairly good news while Diana Shipping (DSX -1.03%) disappointed its investors with its results, what's really in store for Navios?

Navios Maritime Holdings sits at the top of a complicated set of subsidiaries and related entities, with the company owning a substantial stake in Navios Maritime Partners (NYSE: NMM) and Navios Maritime Acquisition (NYSE: NNA), which, in turn, own vessels of their own. Overall, though, Navios Maritime Holdings depends on the health of the shipping industry to drive its results, and so it has suffered along with DryShips and Diana Shipping during the down-phase of the market, and has risen recently as prospects start to improve. Let's take an early look at what's been happening with Navios Maritime Holdings over the past quarter, and what we're likely to see in its report.

Stats on Navios Maritime Holdings

Source: Yahoo! Finance.

How will Navios Maritime Holdings fare this quarter?
In recent months, analysts have had mixed views on the prospects for Navios Maritime Holdings, widening its third-quarter loss estimates by $0.01 per share, but boosting its full-year 2014 projections by $0.13 per share. The stock has risen from its lows, jumping 20% since mid-August.

We've already gotten a good sense of how Navios Maritime Holdings' earnings might look because Navios Maritime Partners reported at the end of October. Revenue fell 16%, contributing to a more than 40% drop in net income from the year-ago quarter. But those results were in line with what investors had expected to see, and the company's commitment to sustaining its dividend, which produces a yield of nearly 12%, gave shareholders confidence that things are looking up for the industry. That sentiment matches well with what DryShips CEO George Economou said in that company's quarterly report, pointing to "a sustainable recovery in 2014 and beyond.

But not everyone in the industry is convinced that improvement is a sure thing. Diana Shipping's president said in that company's report that although rising import demand from China for raw materials like iron ore could help the industry recover, much of the demand is likely to come from Australia, which involves much shorter trips than drawing those resources from Brazil and other destinations across the Pacific.

The key to understanding Navios Maritime Holdings is that it stands to benefit from both of its affiliates' successes. With substantial stakes in those entities, Navios Maritime Holdings can collect dividend payouts and management agreement fees from its affiliates, helping to support the 3% yield it pays its own shareholders. As it collects more money from Navios Maritime Partners and Navios Maritime Acquisition, those dividends could rise.

In the Navios Maritime Holdings earnings report, watch for the company to give additional color on how the state of the industry affects the parent company's prospects as well as those of its affiliates. Understanding the corporate structure at Navios is essential in order to make smart investment choices.

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