The shipping industry’s growth trajectory remains buoyant thanks to the increased international marine freight transport, the expansion of global trade networks, and the growing demand for streamlined digital shipping services.
Therefore, I think investors could consider investing in quality shipping stocks A.P. Møller – Mærsk A/S (AMKBY), Triton International Limited (TRTN), and Navios Maritime Holdings Inc. (NM). These stocks exhibit higher-than-industry profit margins.
The shipping industry is experiencing remarkable growth, fueled by several key factors. Firstly, there has been a significant increase in international marine freight transport, driven by the growing demand for efficient cargo transportation through ships.
Additionally, the rise in trade-related agreements has facilitated the expansion of global trade networks, further boosting the demand for shipping services. As a result, the global cargo shipping market is projected to reach $4.20 trillion by 2031, growing at a CAGR of 7%.
Moreover, the growing customer demand for faster and streamlined services is a significant factor driving the digital shipping market’s expansion. The global digital shipping market is expected to expand at a CAGR of 21.8% until 2027.
In addition, amidst the heightened economic uncertainties, the container shipping market experienced a decline in profitability during the first quarter of 2023. However, according to shipping expert John McCown, the container shipping industry is expected to remain profitable throughout 2023.
Furthermore, the global market for shipping containers is projected to reach $5.67 billion by 2028, exhibiting a CAGR of 4.6%.
Let us take a look at the stocks mentioned above:
A.P. Møller – Mærsk A/S (AMKBY)
Headquartered in Copenhagen, Denmark, AMKBY operates as an integrated transport and logistics company. It operates in four segments: Ocean; Logistics & Services; Terminals & Towage; and Manufacturing & Others.
AMKBY’s trailing-12-month EBIT and EBITDA margins of 33.45% and 37.33% are 254.1% and 182.2% higher than the respective 9.69% and 13.23% industry averages.
AMKBY’s annual dividend of $3.14 translates to a yield of 34.57% on the current price level. Its four-year average dividend yield is 10.07%. Also, its dividend payouts have grown at a 205.8% CAGR over the past three years.
AMKBY’s total revenue amounted to $14.21 billion in the first quarter that ended March 31, 2023. Its EBIT came in at $2.33 billion, while profit for the period amounted to $2.32 billion. The company reported a free cash flow of $4.22 billion.
AMKBY’s revenue and EPS are likely to come in at $13.17 billion and $0.22 in the fiscal second quarter ending June 2023. Also, it has surpassed consensus EPS estimates in three of the trailing four quarters, which is impressive.
AMKBY has gained 3.5% over the past month to close the last trading session at $9.08.
AMKBY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Value and a B grade for Quality. Within the B-rated Shipping industry, it is ranked #18 among 41 stocks.
Click here to access additional AMKBY ratings for Growth, Momentum, Stability, and Sentiment.
Triton International Limited (TRTN)
Headquartered in Hamilton, Bermuda, TRTN is engaged in the acquisition, leasing, and sale of intermodal containers and chassis to shipping lines and freight forwarding companies. It operates in Equipment Leasing and Equipment Trading segments.
TRTN’s trailing-12-month EBIT and EBITDA margins of 56.54% and 92.15% are 483.3% and 596.8% higher than the respective 9.69% and 13.23% industry averages.
On May 2, 2023, TRTN declared a quarterly cash dividend of $0.70 per common share, payable on June 22, 2023.
While TRTN has a four-year average dividend yield of 4.83%, its current dividend of $2.80 translates to a yield of 3.55% on the current market price. Moreover, the company has raised its dividends at a CAGR of 9.8% over the past three years.
TRTN reported total leasing revenues of $397.72 million in the fiscal first quarter that ended March 31, 2023. Its operating income stood at $221.55 million. The company reported $52.26 million from net cash provided by investing activities, compared to $453.89 million of net cash used in investing activities in the year-ago quarter.
Moreover, the company reported an adjusted net income of $136.09 million or $2.42 per share.
Analysts expect TRTN’s revenue to increase 1.4% year-over-year to $1.62 billion in the fiscal year 2024. Its EPS is expected to grow 3.6% from the previous year to $9.79 in the next year. It surpassed consensus EPS estimates in all four trailing quarters.
The stock has gained 48.6% over the past year and 20.6% year-to-date to close its last trading session at $82.97.
TRTN’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
TRTN has an A grade for Quality. The stock is ranked #19 in the same industry.
To access TRTN’s additional POWR Ratings for Growth, Value, Sentiment, Momentum, and Stability, click here.
Navios Maritime Holdings Inc. (NM)
Headquartered in Grand Cayman, the Cayman Islands, NM operates as a seaborne shipping and logistics company in North America, Australia, Europe, Asia, South America, and internationally. It focuses on the transportation and transshipment of dry bulk commodities, including iron ores, coal, and grains. The company operates in two segments, Dry Bulk Vessel Operations and Logistics Business.
NM’s EBIT and EBITDA margins of 20.28% and 32.33% are 109.3% and 144.4% higher than the 9.69% and 13.23 industry averages.
During the fiscal first quarter that ended March 31, 2022, NM’s revenues increased 10.6% year-over-year to $65.41 million. The company reported a net income attributable to shareholders of $14.47 million or $0.25 per share, compared to a loss of $5 million or $0.28 per share in the previous-year quarter.
NM’s shares soared 1.2% intraday to close the last trading session at $1.69.
NM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It also has a B grade for Value and Sentiment. The stock is ranked #16 in the same industry.
Beyond what is stated above, we’ve also rated NM for Growth, Momentum, Quality, and Stability. Get all NM ratings here.
What To Do Next?
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AMKBY shares were trading at $9.17 per share on Thursday morning, up $0.09 (+0.94%). Year-to-date, AMKBY has gained 1.26%, versus a 15.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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