What happened
Shares of ocean-going dry bulk cargo shipper Star Bulk Carriers (SBLK 1.69%) stock climbed on Thursday to close up 10% after reporting a massive increase in earnings year over year in its fiscal fourth quarter 2021.
Instead of the $0.30 per share Star Bulk earned in Q4 2020, this time around Star Bulk earned $2.96 per share --nearly tenfold growth.
Image source: Getty Images.
So what
Even analysts were kind of shocked by this one. Heading into Q4, Wall Street estimates had Star Bulk pegged for $2.52 per share in earnings, but the company beat even that optimistic prediction with a stick.
Revenues for the quarter surged 169% to $499.9 million, and with the tailwind of powerful profit margins on those revenues, Star Bulk sailed ahead to easily crush earnings estimates. And for 2021 as a whole, revenues grew 106% to $1.4 billion, and earnings were up more than 67 times at $6.71 per share.
Management credited "favorable market conditions during 2021" for helping it achieve "record–high profitability" in 2021, noting that the average time charter equivalent (TCE) rate it was able to charge on its ships last year climbed to $37,406 per day, per vessel. When you consider that shippers generally require TCE rates of only between $4,000 to $6,000 to break even, the fact that Star Bulk was fabulously profitable at TCE rates six times that is no great surprise.
Now what
Management did not give guidance on how much it expects to earn in 2022. However, it did observe that "promising supply and demand balance for the coming years" has it feeling "optimistic about the prospects of the dry bulk markets."
For what it's worth, analysts who follow the stock are slightly more cautious, predicting Star Bulk will earn $5.99 per share this year on revenues of $1.2 billion. If they're right, Star Bulk's 2022 numbers will fall a bit short of the records achieved in 2021 but still leave the stock quite attractively priced at less than 5 times 2022 earnings today.
