Euroseas (ESEA) AI Stock Analysis

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Euroseas

(NASDAQ:ESEA)

77Outperform

Euroseas demonstrates strong financial performance and attractive valuation with a very low P/E ratio and high dividend yield. The earnings call provided a positive outlook with notable revenue growth and fleet expansion. However, negative free cash flow and economic uncertainties pose risks. Technical indicators suggest a fair positive trend, supporting a solid overall stock score.

Positive Factors

Contracts

A new time charter equivalent (TCE) contract for a containership was announced at a rate higher than previously estimated.

Dividends

The quarterly dividend of $0.65, raised from $0.60, remains intact and represents an annualized yield of 8.2%.

Financial Performance

ESEA reported 4Q24 results above expectations and announced an 8.3% dividend increase.

Negative Factors

Interest Expense

3Q24 EPS declined year over year due to an 83.3% increase in interest expense.

Revenue and EPS

Revenue and EPS estimates are reduced due to the spin-off of Euroholdings.

Euroseas (ESEA) vs. S&P 500 (SPY)

Market Cap

$207.62M

Dividend Yield8.32%

Average Volume (3M)40.85K

Price to Earnings (P/E)1.8

Beta (1Y)0.93

Revenue Growth12.43%

EPS Growth-1.63%

CountryUS

Employees365

SectorIndustrials

Sector Strength70

IndustryMarine Shipping

Share Statistics

EPS (TTM)16.15

Shares Outstanding7,047,537

10 Day Avg. Volume39,186

30 Day Avg. Volume40,850

Financial Highlights & Ratios

PEG Ratio0.65

Price to Book (P/B)N/A

Price to Sales (P/S)1.11

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$53.67

Price Target Upside81.69% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

Euroseas Business Overview & Revenue Model

Company DescriptionEuroseas Ltd. (ESEA) is a shipping company primarily engaged in the transportation of dry bulk and containerized cargoes. The company operates in the marine shipping sector and owns and manages a fleet of container ships and dry bulk vessels that serve international routes. Euroseas focuses on providing reliable and efficient shipping services to global shippers, leveraging its fleet to transport a variety of goods across major shipping routes.

How the Company Makes MoneyEuroseas makes money through the operation of its fleet of container ships and dry bulk vessels, which are chartered out to customers on short-term or long-term contracts. The company earns revenue from these charters based on the duration and terms agreed upon with its clients, which include shipping companies and other entities requiring maritime transport services. Key revenue streams include time charter contracts, where vessels are hired out for specific time periods, and voyage charters, where ships are hired to transport specific cargo on particular routes. The company's earnings are influenced by factors such as shipping rates, fleet utilization, and operational efficiency. Euroseas also benefits from strategic partnerships with other shipping companies and alliances that enable it to optimize its fleet deployment and expand its market reach.

Euroseas Financial Statement Overview

Summary

Euroseas has shown strong financial performance with significant revenue and profit growth. The income statement is robust with high profit margins, and the balance sheet reflects stable equity and manageable debt levels. However, negative free cash flow due to capital expenditures is a concern that needs attention.

Income Statement

Very Positive

Euroseas has demonstrated strong revenue growth over the years, with a significant increase from $53.3 million in 2020 to $212.9 million in 2024. The gross profit margin is healthy at approximately 72.2% for 2024, and the net profit margin is robust at about 53.0%. The company has shown consistent EBIT and EBITDA margins, indicating efficient operational management. Overall, the income statement reflects a strong financial performance with significant growth in key profitability metrics.

Balance Sheet

Positive

The balance sheet shows a stable equity base, with stockholders' equity rising from $35.4 million in 2020 to $362.9 million in 2024. The debt-to-equity ratio is modest at approximately 0.57 in 2024, indicating effective leverage management. The equity ratio has improved, reflecting strengthened financial stability. However, the increase in total debt over the years suggests a need for careful debt management in the future.

Cash Flow

Positive

Euroseas' operating cash flow has been consistently positive, reaching $128.2 million in 2024, though there was a notable drop in free cash flow due to capital expenditures. The free cash flow to net income ratio has been negative recently, highlighting potential cash flow management issues. Despite this, the company maintains a strong operational cash flow to net income ratio, indicating efficient cash generation from operations.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
212.90M	189.36M	182.69M	93.89M	53.30M
	Gross Profit
153.70M	119.86M	114.52M	52.14M	12.61M
	EBIT
120.02M	119.43M	106.64M	45.65M	6.98M
	EBITDA
135.74M	143.82M	129.84M	52.95M	14.77M
	Net Income Common Stockholders
112.78M	114.55M	106.24M	42.96M	-83.72K
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
73.74M	58.61M	25.85M	26.53M	3.56M
	Total Assets
591.22M	424.67M	328.59M	221.51M	110.58M
	Total Debt
205.40M	130.00M	107.23M	118.04M	69.37M
	Net Debt
131.66M	71.39M	81.39M	91.51M	65.81M
	Total Liabilities
228.27M	158.10M	160.44M	144.74M	75.23M
	Stockholders Equity
362.95M	266.58M	168.16M	76.77M	35.36M
Cash Flow		Free Cash Flow
-50.75M	17.71M	23.39M	-21.49M	1.76M
	Operating Cash Flow
128.17M	130.01M	114.08M	52.63M	2.43M
	Investing Cash Flow
-168.77M	-102.19M	-87.13M	-74.11M	16.30M
	Financing Cash Flow
56.96M	5.06M	-27.01M	46.65M	-18.32M

Euroseas Technical Analysis

Technical Analysis Sentiment

Positive

Last Price29.54

Price Trends

50DMA

27.93

Positive

100DMA

28.29

Positive

200DMA

30.59

Negative

Market Momentum

MACD

1.19

Negative

RSI

66.59

Neutral

STOCH

58.79

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ESEA, the sentiment is Positive. The current price of 29.54 is below the 20-day moving average (MA) of 29.98, above the 50-day MA of 27.93, and below the 200-day MA of 30.59, indicating a neutral trend. The MACD of 1.19 indicates Negative momentum. The RSI at 66.59 is Neutral, neither overbought nor oversold. The STOCH value of 58.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ESEA.

Euroseas Risk Analysis

Euroseas disclosed 87 risk factors in its most recent earnings report. Euroseas reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Euroseas Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DAC	79 Outperform	$1.34B	2.76	15.68%	4.79%	6.00%	-9.89%
ESEA	77 Outperform	$207.62M	1.82	35.83%	8.32%	12.43%	-1.63%
NMM	75 Outperform	$922.96M	2.61	12.46%	0.64%	2.08%	-14.91%
SBLK	72 Outperform	$1.58B	4.83	14.71%	16.25%	33.31%	62.94%
GOGL	68 Neutral	$1.37B	6.14	11.68%	15.33%	9.33%	98.70%
CMRE	64 Neutral	$1.04B	3.55	13.07%	5.31%	37.10%	-17.36%
Sector *	62 Neutral	$7.50B	12.89	3.19%	3.38%	3.64%	-14.27%

* Industrials Sector Average

Performance Comparison

ESEA

Euroseas

29.54

2.71

10.10%

CMRE

Costamare

8.99

-1.63

-15.35%

DAC

Danaos

73.45

3.89

5.59%

NMM

Navios Maritime Partners

31.00

-11.76

-27.50%

SBLK

Star Bulk Carriers

14.24

-6.58

-31.60%

GOGL

Golden Ocean Group

7.39

-4.39

-37.27%

Euroseas Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: 9.08% | Next Earnings Date: May 21, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance with increased revenue, income, and dividends. Fleet expansion and strong charter coverage were also positive aspects. However, challenges remain, including slight declines in charter rates and geopolitical and economic uncertainties.

Highlights

Revenue and Income Growth

Total net revenues for Q4 2024 were $53.3 million, representing an 8.7% increase over the previous year, with a net income of $24.4 million.

Dividend Increase

The Board of Directors declared a quarterly dividend of $0.65 per common share for Q4 2024, a $0.05 increase over the previous year.

Strong Charter Coverage

Euroseas secured strong charter coverage with approximately 85% of the fleet fixed for 2025 and about 49% for 2026.

Fleet Expansion

Euroseas took delivery of two new eco-friendly feeder containerships and commenced charters at a daily rate of $32,000 each.

Lowlights

Slight Decline in Charter Rates

Containership charter rates experienced a slight decline in Q4 2024, except for larger segments where they held steady.

Geopolitical and Economic Challenges

Global economic growth projections remain underwhelming with geopolitical risks and trade tensions posing challenges to the market outlook.

Lower Average Time Charter Rates

Despite an increase in the number of vessels, lower average time charter rates were earned in 2024 compared to 2023.

Company Guidance

During the Euroseas Q4 2024 conference call, the company reported total net revenues of $53.3 million, an increase from the previous year's fourth quarter. The net income was $24.4 million, with adjusted net income at $23.3 million. The adjusted EBITDA for the quarter stood at $32.8 million. Euroseas declared a quarterly dividend of $0.65 per common share, with an annualized dividend yield of approximately 7.8%. The company has repurchased 425,000 shares since May 2022, totaling $9.25 million, and will distribute shares of Euroholdings Ltd., representing about 5% of their NAV, to shareholders. The fleet, consisting of 24 vessels with a capacity of nearly 71,000 TEU and an average age of 13.5 years, saw no idle periods except for one vessel undergoing maintenance. The global economic outlook, as projected by the IMF, remains stable, with the US growth forecast at 2.7% and emerging markets like India driving global growth.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.