ATHENS - Euroseas Ltd . (NASDAQ:ESEA), a Greek container ship operator, has announced the signing of a time charter contract for its under-construction vessel, M/V Stephania K. The contract, with an unnamed leading liner company, sets a daily rate of $22,000 for a period of 23 to 25 months, commencing upon the ship's delivery from the shipyard, expected on June 28, 2024.
The deal marks a significant step for Euroseas, as it represents a substantial improvement in terms and rate compared to the recent charter of its sister ship M/V Monica, which secured a rate of $16,000 for 12 months. The M/V Stephania K charter is anticipated to contribute around $11.0 million of EBITDA for the minimum contracted period and increases the company's charter coverage for the remainder of 2024 to 90%.
This newbuilding is the sixth in a series of nine and the second of three 1,800 TEU (twenty-foot equivalent unit) container ships designed to be fuel-efficient. The acquisition was financed through a blend of Euroseas' own funds and a $22.5 million loan from the National Bank of Fujairah.
Euroseas operates a fleet of 22 vessels, including 15 feeder and 7 intermediate container ships, totaling a cargo capacity of 66,261 TEU. With the addition of four new vessels, including M/V Stephania K, by the end of 2024, the company's fleet will expand to 26 vessels with a total capacity of 75,461 TEU.
The company, which has been in the shipping business for over a century and a half, is managed by Eurobulk Ltd., an affiliated ship management company certified in quality and environmental management. Euroseas trades on the NASDAQ Capital Market and employs its vessels on spot and period charters, as well as through pool arrangements.
In other recent news, Euroseas Ltd. has been making significant strides in the container shipping industry. Maxim Group recently raised the price target for Euroseas shares to $52.00, maintaining a Buy rating. This adjustment follows the company's strong first-quarter results for 2024, which exceeded expectations with an 11% revenue increase year over year.
Euroseas' robust financial performance in Q1 2024 was highlighted in their recent earnings call, with a net income of $20 million, or $2.87 per diluted share. The company also reported total net revenues of $46.7 million, an 11% increase from the previous year. This growth is largely attributed to the addition of two new ships to their fleet.
In addition to these recent developments, Euroseas has confirmed the delivery of two vessels in the second quarter of 2024, with more expected throughout the year. The company has maintained its quarterly dividend at $0.60 per share, signaling confidence in its financial stability and future prospects. As per analyst projections, Euroseas is expected to generate free cash flow in 2025, despite an anticipated increase in debt to finance the acquisition of new containerships.
Finally, it's worth noting that Euroseas' book value per share for the first quarter of 2024 stood at $40.55, a significant 48.3% increase year over year. Analysts estimate this figure to climb further to $48.68 in the first quarter of 2025.
InvestingPro Insights
As Euroseas Ltd. (NASDAQ:ESEA) continues to expand its fleet and secure profitable charter rates, investors may find the company's financial metrics and market performance indicative of its strategic positioning. Here are some highlights from InvestingPro that shed light on Euroseas' financial health and market performance:
With a robust gross profit margin of 72.25% for the last twelve months as of Q1 2024, Euroseas showcases its ability to maintain a strong profitability ratio in the competitive shipping industry. This impressive margin is a testament to the company's efficient operations and cost management strategies. Additionally, the company's P/E ratio stands at 2.63, adjusted for the same period, which may suggest that the stock is trading at a low earnings multiple relative to its earnings power.
Investors looking for income-generating stocks might be attracted to Euroseas' significant dividend yield of 6.29%, coupled with a 20% dividend growth, reflecting the company's commitment to returning value to shareholders. Moreover, the company's strong return over the last year, with a price total return of 86.93%, indicates that Euroseas has rewarded its investors with substantial gains.
For those considering an investment in Euroseas, the company's financial performance is further detailed in InvestingPro, where there are 11 additional InvestingPro Tips available. These tips can provide deeper insights into the company's valuation, earnings, and future prospects. Interested readers can access these tips by visiting the dedicated page for Euroseas at https://www.investing.com/pro/ESEA. For a more comprehensive analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, providing an even greater value on this investment intelligence platform.
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