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Strong quarterly results make Nordic American an attractive pick

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Part 11
Strong quarterly results make Nordic American an attractive pick PART 11 OF 11

Analyst targets and company valuation metrics for Nordic

Earnings estimates

For the third quarter of 2014, Wall Street consensus estimates Nordic American Tankers’ adjusted earnings per share at $0.075. Meanwhile, analysts estimate sales at $50.2 million. Adjusted net income is forecasted at $5.01 million with operating profit at $8.07 million and earnings before interest taxes depreciation and amortization at $27.9 million.

Analyst targets and company valuation metrics for Nordic

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Analyst targets

Global Hunter Securities initiated coverage on shares of Nordic American Tanker (NAT) in a research report. The firm issued a buy rating on the stock. Canaccord Genuity recently reaffirmed its sell rating on NAT with a $7 target price, which is lower than its current price.

Valuation metrics

The price-to-earnings (or PE) ratio is one of the main metrics investors use to decide if a stock is properly valued. It is calculated by dividing a stock’s price by its trailing 12-month earnings per share. In Nordic American Tankers’ case, we have a negative trailing 12-month EPS, which is why the actual PE ratio cannot be determined.

However, we can ascertain forward PE, which is price per share divided by its projected future earnings instead of current earnings. A few industry analysts believe that this gives a better picture than the PE ratio does. The industry average for forward PE stands at 17.18, while NAT records 45.52. Meanwhile, peers like DHT Holdings (DHT), Teekay Tankers (TNK), Frontline Ltd. (FRO), and Tsakos Energy Navigation Ltd. (TNP) record 17.15, 6.92, N/A, and 10.56 respectively.

Meanwhile, enterprise value to EBITDA (earnings before interest, tax, depreciation, and amortization) for NAT stands at 5.35 compared to DHT Holdings (DHT), Teekay Tankers (TNK), Frontline Ltd. (FRO), and Tsakos Energy Navigation Ltd. (TNP), recording 31.14, 8.87, 13.65, and 11.25, respectively. The industry (SEA) average stands at 15.55.

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