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Costamare Stock Surges 23% YTD: What's Next for Investors?
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Costamare (CMRE - Free Report) has displayed an impressive performance, with its shares appreciating 22.6% year to date. This growth is impressive and has outperformed its industry. CMRE stock has also performed better than other shipping stocks like Frontline plc (FRO - Free Report) and Star Bulk Carriers (SBLK - Free Report) . The bullishness in the stock is fueled by favorable market sentiments pertaining to dry bulk shipping and its focus on fleet modernization and capacity enhancement.
YTD Price Performance
Image Source: Zacks Investment Research
Closing at $13.94 on Aug. 27, the stock trades at a discount of 20.7% to its 52-week high mark of $17.58 reached on June 24. Moreover, the stock’s current level reflects a premium of 63% from its 52-week low.
Given the recent rally, the question that naturally arises is whether Costamare stock can sustain its bullish price performance or should investors book profits now. Before that, let's delve deep to unearth the reasons behind this northward price movement.
Factors Working in Favor of the CMRE Stock
Shares of CMRE are being aided by favorable market conditions in the dry bulk sector. Factors like a build-up of iron ore inventories in China have resulted in higher capesize freight rates.
The company's dry bulk and containership fleets are being aided by the ongoing Red Sea tensions. Reduced container availability due to the Red Sea tensions has resulted in a rise in freight costs. CMRE stock is being aided by the uptick in dry bulk rates. Lower capacity is expected to boost earnings. Rates are likely to remain high for quite some time, which should aid shipping stocks like Costamare. The company’s focus on fleet modernization and leasing is also impressive.
Costamare’s shareholder-friendly approach throws light on its financial bliss. The shipping company pays out a quarterly dividend of 11.5 cents (46 cents annualized) per share, which gives it a 3.3% yield at the current stock price. (Check Costamare’s dividend history here).
Impressive Valuation Picture for CMRE Stock
From a valuation perspective, Costamare is trading relatively cheaply. CMRE is currently trading at a forward sales multiple of 0.99, below its median over the last five years and also at a discount compared to the broader industry. The company has a Value Score of A.
Image Source: Zacks Investment Research
Key Headwinds: Escalated Debt & High Costs
Despite the above-mentioned tailwinds, there are a couple of factors that one has to be mindful of. Even though Costamare is attractively valued and has strong fundamentals, we are concerned about its high debt levels.
Long-Term Debt to Capitalization
Image Source: Zacks Investment Research
CMRE’s expenses are shooting up, mainly voyage costs. Voyage costs skyrocketed 463% in 2023 from the 2022 level. High fuel costs are also pushing up total expenses. High costs hinder bottom-line growth.
Given the headwinds surrounding the stock, earnings estimates have been southbound, as shown below.
Image Source: Zacks Investment Research
To Sum Up
There is no doubt that the stock is attractively valued and upbeat dry bulk market conditions are serving the CMRE stock well. Given the abovementioned headwinds, we believe that it is not the right time to buy CMRE stock. We can safely conclude that investors should refrain from rushing to buy CMRE now as it is facing quite a few challenges.
Instead, they should monitor the company’s developments closely for a more appropriate entry point. For those who already own the stock, it will be prudent to stay invested. The stock’s Zacks Rank #3 (Hold) supports our thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Costamare Stock Surges 23% YTD: What's Next for Investors?
Costamare (CMRE - Free Report) has displayed an impressive performance, with its shares appreciating 22.6% year to date. This growth is impressive and has outperformed its industry. CMRE stock has also performed better than other shipping stocks like Frontline plc (FRO - Free Report) and Star Bulk Carriers (SBLK - Free Report) . The bullishness in the stock is fueled by favorable market sentiments pertaining to dry bulk shipping and its focus on fleet modernization and capacity enhancement.
YTD Price Performance
Closing at $13.94 on Aug. 27, the stock trades at a discount of 20.7% to its 52-week high mark of $17.58 reached on June 24. Moreover, the stock’s current level reflects a premium of 63% from its 52-week low.
Given the recent rally, the question that naturally arises is whether Costamare stock can sustain its bullish price performance or should investors book profits now. Before that, let's delve deep to unearth the reasons behind this northward price movement.
Factors Working in Favor of the CMRE Stock
Shares of CMRE are being aided by favorable market conditions in the dry bulk sector. Factors like a build-up of iron ore inventories in China have resulted in higher capesize freight rates.
The company's dry bulk and containership fleets are being aided by the ongoing Red Sea tensions. Reduced container availability due to the Red Sea tensions has resulted in a rise in freight costs. CMRE stock is being aided by the uptick in dry bulk rates. Lower capacity is expected to boost earnings. Rates are likely to remain high for quite some time, which should aid shipping stocks like Costamare. The company’s focus on fleet modernization and leasing is also impressive.
Costamare’s shareholder-friendly approach throws light on its financial bliss. The shipping company pays out a quarterly dividend of 11.5 cents (46 cents annualized) per share, which gives it a 3.3% yield at the current stock price. (Check Costamare’s dividend history here).
Impressive Valuation Picture for CMRE Stock
From a valuation perspective, Costamare is trading relatively cheaply. CMRE is currently trading at a forward sales multiple of 0.99, below its median over the last five years and also at a discount compared to the broader industry. The company has a Value Score of A.
Key Headwinds: Escalated Debt & High Costs
Despite the above-mentioned tailwinds, there are a couple of factors that one has to be mindful of. Even though Costamare is attractively valued and has strong fundamentals, we are concerned about its high debt levels.
Long-Term Debt to Capitalization
Image Source: Zacks Investment Research
CMRE’s expenses are shooting up, mainly voyage costs. Voyage costs skyrocketed 463% in 2023 from the 2022 level. High fuel costs are also pushing up total expenses. High costs hinder bottom-line growth.
Given the headwinds surrounding the stock, earnings estimates have been southbound, as shown below.
Image Source: Zacks Investment Research
To Sum Up
There is no doubt that the stock is attractively valued and upbeat dry bulk market conditions are serving the CMRE stock well. Given the abovementioned headwinds, we believe that it is not the right time to buy CMRE stock. We can safely conclude that investors should refrain from rushing to buy CMRE now as it is facing quite a few challenges.
Instead, they should monitor the company’s developments closely for a more appropriate entry point. For those who already own the stock, it will be prudent to stay invested. The stock’s Zacks Rank #3 (Hold) supports our thesis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.