Please ensure Javascript is enabled for purposes of website accessibility

Why DryShips Inc.'s Shares Popped 19.9% Today

By Travis Hoium - Oct 30, 2018 at 4:09PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings were strong, but there's a risk hidden in the results.

What happened 

Shares of DryShips Inc. (DRYS) jumped as much as 19.9% in early trading Tuesday after reporting third-quarter financial results. Shares gave back some gains late in the day but were still up 14.8% at 3:15 p.m. EDT. 

So what

Revenue jumped 65.6%, to $49.6 million, and DryShips swung from a net loss of $15.2 million a year ago to an $11.6 million profit. That equates to $0.12 per share in earnings for the quarter.

Large cargo ship on the water.

Image source: Getty Images.

Operational results were encouraging and include new vessels acquired over the past year. But to pay for those vessels, management had to issued shares, increasing the share count from 36.2 million shares to 97.3 million shares outstanding last quarter. 

Now what

Stronger results are a big positive for DryShips, but the dilution of shares is always lurking in the background. The company's management has a long history of self-dealing and destroying shareholder value. That's what's keeping me out of shares today, even if revenue and earnings are trending in the right direction. Even in a strong operating environment, dilutive share offerings are never off the table for DryShips. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

DryShips Inc. Stock Quote
DryShips Inc.
DRYS

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
389%
 
S&P 500 Returns
125%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.