Nov 14, 2007

Jim Jubak on Quintana Maritime

On Nov. 5, Quintana Maritime (QMAR) reported earnings of 13 cents a share for the third quarter of 2007. That was an improvement from a loss of 19 cents a share in the third quarter of 2006. Excluding an unrealized loss and a write-off of unamortized financing costs, the company showed earnings of 39 cents a share. That was 3 cents a share better than the average projection of Wall Street analysts, who had used adjusted earnings in their estimates. Revenue climbed to $64 million from $25 million.

And it looks like rates for dry-bulk shippers will continue to climb. Charter rates for capesize- and supramax-class ships on one-year charter climbed 5.8% and 7.8%, respectively, in the week that ended Oct. 23, according to Oppenheimer. As I wrote when I added Quintana Maritime to Jubak's Picks on Oct. 16: "When dry-bulk shipping rates are at highs, it doesn't hurt to have ships coming off charter, because that gives a company a chance to sign them to new contracts at higher prices. Quintana Maritime has five ships coming off below-current-market-rate charters in the first two quarters of 2008. That's one reason I think earnings growth will beat Wall Street estimates of 54% growth in 2008 -- even after the company is on target to turn in 81% growth in 2007."

The stock now pays a 4.7% dividend. Indications are that the company is exploring the possibility of a sale. Buyers have kicked the tires -- the hulls, I mean -- and the first round of bids is due Nov. 16. Estimates of a buyout price are all over the block, ranging from a low of $23 a share to a high of $39. Any purchase would close in 2008. As of Nov. 13, I'm raising my target price on this stock to $33 a share by March 2008 from my prior target price of $32 a share.

~ Jim Jubak, "5 Ways to Ride Out the Market's Storm," MSN Money, November 14, 2007

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