Shares of DryShips Falling Ahead of Q4 Earnings Report After the Bell

DryShips Inc. (DRYS) is scheduled to announce its results for the fourth quarter 2010 tonight after the close. The dry-bulk transportation company, which is somewhat unique in the shipping industry in that it operates both drybulk carriers and also ultra-deep-water drillships, is expected to report its earnings at $0.26 per share on revenues of $226.21 million. This is up from last fiscal year, when DryShips earned $0.19 per share on revenues of $193.45 million.

For the third quarter of the year, DryShips Inc reported adjusted earnings of $0.38 per share. The co.’s revenue came in at $225.5 million, beating the consensus estimate of $216.92 million. DryShips, which has surprised on estimates 4 out of the last 5 quarters, also surpassed the earnings expectations which were pegged at $0.25 per share.

Shares of Athens, Greece -based shipper were down 2 cents to $4.94 during mid-day trading on Wednesday, hitting $4.92. Buyers need to step up and support the issue here or this weakness could gain some traction and lead to a 50-day MA test relatively soon, which is currently at $4.90. DryShips Inc has a market cap of $1.53 B and a 200-day moving average of $4.74.

From a valuation perspective, DRYS is cheap. It currently trades at just 4.9x forward 2011 earnings and it has a P/E to Growth ratio of just 0.45, well under its peers at 1.9. In addition to its cheap P/E, ticker also sports a low price-to-book ratio of only 0.51, while its peers are at 1.6.

The company has a trailing twelve return on equity (ROE) of 2.40% and a a trailing twelve return on assets (ROA) of 3.80%.

DryShips currently garners five “Buy” ratings from Wall Street analysts, including that of Cantor Fitzgerald’s analyst Natasha Boyden, who maintains a $7 PPS target on the shares. Boyden argues that the co.’s diversification into the offshore oil deep water drilling sector — DRYS operates 2 ultra deep water semisubmersible drilling rigs and 4 ultra deep water newbuilding drillships — is a positive development and could lead to a spin-off of the segment.

The median Wall Street price target on DRYS shares is $6.00 and the high target is set at $9.50.

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About Ron Haruni 1067 Articles
Ron Haruni is the Co-Founder & Editor in Chief of Wall Street Pit.

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