International Seaways Inc (INSW, Financial) has seen a daily gain of 3.8% and a three-month gain of 7.93%. The company's Earnings Per Share (EPS) stands at 13.26. The question that arises is: Is the stock fairly valued? This article presents a comprehensive valuation analysis of International Seaways, shedding light on its financial strength, profitability, and growth prospects. Read on to delve deeper into the financial intricacies of this company.
Company Introduction
International Seaways Inc owns and operates a fleet of oceangoing vessels primarily engaged in the transportation of crude oil and petroleum products. The company's vessel operations are divided into two segments: Crude Tankers and Product Carriers. The fleet comprises ULCC, VLCC, Suezmax, Aframax, and Panamax crude tankers, as well as LR1, LR2, and MR product carriers. With a current stock price of $42.53, International Seaways has a market cap of $2.10 billion. The company's GF Value, an estimation of fair value, stands at $46.74.
Summarizing GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. According to this measure, International Seaways (INSW, Financial) stock is estimated to be fairly valued. If the stock price is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Given that International Seaways is fairly valued, the long-term return of its stock is likely to be close to the rate of its business growth.
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Financial Strength
Investing in companies with low financial strength could result in permanent capital loss. Therefore, it's crucial to review a company's financial strength before deciding whether to buy shares. International Seaways has a cash-to-debt ratio of 0.24, ranking worse than 65.14% of 1027 companies in the Oil & Gas industry. Based on this, GuruFocus ranks International Seaways's financial strength as 6 out of 10, suggesting a fair balance sheet.
Profitability and Growth
Investing in profitable companies carries less risk, especially in companies that have demonstrated consistent profitability over the long term. International Seaways has been profitable 2 years over the past 10 years. During the past 12 months, the company had revenues of $1.20 billion and Earnings Per Share (EPS) of $13.26. Its operating margin of 60.16% is better than 94.57% of 976 companies in the Oil & Gas industry. Overall, GuruFocus ranks International Seaways's profitability as fair.
Growth is probably one of the most important factors in the valuation of a company. International Seaways's 3-year average revenue growth rate is better than 52.86% of 857 companies in the Oil & Gas industry. International Seaways's 3-year average EBITDA growth rate is 32.2%, which ranks better than 70.67% of 825 companies in the Oil & Gas industry.
ROIC vs WACC
Another way to evaluate a company's profitability is to compare its return on invested capital (ROIC) to its weighted cost of capital (WACC). Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, International Seaways's ROIC was 31.17, while its WACC came in at 4.97.
Conclusion
In conclusion, the stock of International Seaways (INSW, Financial) is estimated to be fairly valued. The company's financial condition is fair and its profitability is fair. Its growth ranks better than 70.67% of 825 companies in the Oil & Gas industry. To learn more about International Seaways stock, you can check out its 30-Year Financials here.
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