Navios Maritime Hit Rough Waters in 2011
As 2011 comes to a close, it's a great time to look back at what happened to the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.
Today, let's take a look at Navios Maritime Holdings (NYS: NM) . The Greek shipping company found itself near the epicenter of two harsh realities in 2011: Greece's sovereign debt troubles and a terrible pricing environment for shipping. Despite a nice dividend yield, investors bid the stock down substantially this year. Below, I'll take a closer look at the events that moved shares of Navios Maritime Holdings this year.
Stats on Navios Maritime Holdings
|2011 YTD Return||(29.4%)|
|Market Cap||$358 million|
|1-Year Revenue Growth||11.3%|
|1-Year Earnings Growth||(21.6%)|
|Cash / Debt||$195 million / $1.48 billion|
|CAPS Rating (out of 5)||****|
Sources: S&P Capital IQ and Motley Fool CAPS.
Why did Navios sink this year?
As badly as shares of Navios performed this year, they actually represent fairly good results compared with the rest of the industry. Eagle Bulk Shipping and Excel Maritime (NYS: EXM) both dropped 75% or more this year, while DryShips (NAS: DRYS) lost more than 60%. Even Diana Shipping's (NYS: DSX) stock only managed to limit its losses to about 36% for the year.
The declines stem from continuing weakness in the Baltic Dry Index, the benchmark by which bulk shippers measure demand for their vessels. Although the BDI was flat this year, it's still down 85% since mid-2008. That hasn't stopped operators like Genco Shipping & Trading (NYS: GNK) , which doesn't have as much protection from locked-in long-term contracts as some of its peers, from operating profitably -- but it does present a big challenge.
To deal with the bad conditions, Navios is taking steps to stand out from the wreckage of its industry. The company got a favorable rating from one Wall Street analyst after it posted revenue and EBITDA gains in its most recent quarter. More important, Navios has branched out into logistics, which makes the company more diversified than competitors that focus solely on dry bulk shipping.
Eventually, though, the entire industry will have to deal with the underlying issue of overcapacity. Whether a big upswing in the global economy or contraction in the shipping industry proves to be the factor that gets supply and demand back toward equilibrium remains to be seen, but until the situation resolves itself, Navios could continue to see choppy waters for the foreseeable future.
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At the time this article was published Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. 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 Fool has a disclosure policy.
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