One Big Red Flag After DryShips Earnings

Before you go, we thought you'd like these...
Before you go close icon

Blake Bos is bearish on DryShips  and here's why. The company generated about $113 million of earnings before interest, taxes, depreciation, or amortization in the first quarter, this can also be viewed as an approximation of operating cash flow. Of that, $56 million goes to interest expenses, and the remaining $57 million can be used for capital expenditures. Simply stated, $57 million for DryShips isn't going to cut it. This low level of cap ex crimps the company's ability to modernize its fleet with fuel-efficient ships, and that, in turn, puts DryShips at a competitive disadvantage. In fact, if you want to invest in a shipping company, a better alternative is Diana Shipping , with a more modern and fuel-efficient fleet than DryShips.

The best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report, "3 Stocks That Will Help You Retire Rich," names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article One Big Red Flag After DryShips Earnings originally appeared on

Blake Bos has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading