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Why Safe Bulkers Stock Just Jumped 12%

By Rich Smith - Updated Apr 30, 2021 at 8:48PM

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The BDI is on a tear, and it's pulling Safe Bulkers stock higher along with it.

What happened

Shares of dry bulk shipping stock Safe Bulkers (SB -6.67%) are living up to their name for investors today, rising 12% through 1:05 p.m. EDT after the company set an earnings date for its fiscal first-quarter 2021 financial results.

As management advised, Safe Bulkers will release its numbers after close of trading next week, on Wednesday, May 5.  

Green arrow trending up over the numerals 2021, also in green.

Image source: Getty Images.

So what

So why the enthusiastic response to a rather ho-hum announcement of an earnings date? Well, consider what Safe Bulkers might report on that date.

Heading into the Q1 report, analysts are already optimistic that Safe Bulkers will reverse its year-ago loss and return a $0.10 per-share profit on sales growth of 27% -- $57.9 million in revenue. Lending confidence to these predictions, the Baltic Exchange Dry Index (BDI) has been on a winning streak ever since the start of this year. The BDI tracks rates shippers like Safe Bulkers can get for hauling dry bulk goods (e.g., coal, iron pellets, and grain) across the ocean. From a starting point near 1,400 at the beginning of 2021, the BDI has more than doubled, passing the 3,000 mark just yesterday.  

Now what

How will this translate into better numbers for Safe Bulkers itself? Granted, much of the BDI's gains came after the end of the first quarter. But even just through the end of March, the index had already gained 43.5%. Assuming only a constant volume of business for the company, that would seem to imply that Safe Bulkers should easily hit analyst targets for revenue growth and perhaps for earnings growth as well.

Plus, management should be able to point to the further 47% rise in the BDI over the period since Q1 ended to predict further acceleration in sales and earnings growth in Q2. Long story short: We could be looking at a "beat and raise" situation when Safe Bulkers reports next week, and that should make shareholders very happy indeed.

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Stocks Mentioned

Safe Bulkers, Inc. Stock Quote
Safe Bulkers, Inc.
$3.36 (-6.67%) $0.24

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