Containership-operator Seaspan Corporation (NYSE:ATCO) missed on earnings yesterday, reporting $0.11 per share in Q3 profit instead of the $0.17 that Wall Street expected. Investors punished Seaspan stock for the miss, sending its shares down more than 4% in Thursday trading. This morning, they're rewarding the stock of one of Seaspan's rivals instead.
In mid-afternoon trading, shares of Seaspan competitor Costamare (NYSE: CMRE) are up 7.9% as of 2:50 p.m. EST -- and were up more than 10% earlier in the day. Costamare reported its own earnings more than two weeks ago, and they were pretty great -- sales up 36% year over year and earnings more than double from a year ago.
As you might expect after such happy news, Costamare shares are doing quite well, up more than 40% over the past year. And today, they're going up even more despite downbeat results from Seaspan. Why? Perhaps it's because, despite the earnings miss, Costamare's competitor is sounding very optimistic about the containership business, in general.
In its post-earnings call with analysts, Seaspan CEO Bing Chen predicted the containership market is "entering a new normal market by consolidation." Demand for shipping is solid, and not many new ships are being built these days. With utilization of its fleet at 99.6%, Seaspan is raising cash and preparing to expand its fleet to take on more business -- a development that bodes well for Costamare, as well.
As Seaspan's CEO described the situation today, "the world of speculative construction and ordering" that kept a lid on shipping rates "has gone by." Today, with just 10 shippers controlling about "90% of global container trade," pricing is more rational, providing better opportunities for companies to earn a profit from this business.
Investors are taking that analysis and running with it -- straight into the arms of Seaspan's competitor.