New York-listed Star Bulk Carriers was able to beat analyst expectations both on its touted shareholder dividend and on profit in a record third quarter.
The world's largest bulker owner is paying out a dividend of $1.25 per share, which Jefferies lead shipping analyst Randy Giveans said beat his estimate of a payout between $1.15 and $1.20.
Star's earnings did likewise. The owner reported adjusted net income of $2.19 per share, against the consensus analyst expectations of $2.13. Jefferies had predicted $2.16.
Revenue came in at $415.7m, above forecasts of $355m.
Star's adjusted net income of $224.7m was more than eight times higher than its year-ago total of $27.5m, or $0.29 per share. Revenue for the third quarter of 2020 was less than half this year's figure at $220.4m.
"Strong global growth and increased infrastructure spending has led to a healthy rise in demand for commodities which combined with a historically low orderbook, create favourable long term dynamics for our industry," CEO Petros Pappas said in a statement.
Star runs a fleet of 128 ships that transport materials like iron ore, grain, fertilizers and minerals.
With an aggregate capacity of 14.1 million dwt, the fleet consists of 17 newcastlemax, 24 capesize, seven post panamax, 41 kamsarmax, two panamax, 20 ultramax and 17 supramax vessels with carrying capacities between 52,425 dwt and 209,529 dwt.
Stifel analyst Ben Nolan called the dividend "very strong" and had high praise for Star's quarter.
"The beat was rate-driven with rates of $30,626, which were above our estimates of $29,958. While spot rates have been falling recently, we expect the majority of 4Q days have been booked at much higher levels with colour likely coming on the call," he told clients.
"Additionally, as reported in broker reports, the company was busy contracting a number of vessels on fixed-rate term business when market rates were peaking. With solid results and a big dividend, particularly given recent weakness in shares, we expect shares to trade materially higher tomorrow morning."
Putting a number on the fourth quarter
Fearnley Securities said guidance for the final three months suggests 71% of vessel days booked at $38,000 per day.
"While we ultimately expect the full quarter number to come in lower due to the current rate trajectory/levels, Star Bulk's Q4 numbers should still come in well clear of Q3," the investment bank said.
Operationally the quarter was in line with expectations, Fearnley said.
In October, Star Bulk also repurchased 466,268 of its shares in open-market transactions at an average price of $22.01 each.
This meant a spend of $10.3m, pursuant to the previously announced $50m buyback programme.
