First quarter results
EV/EBITDA (enterprise value over earnings before interest, tax, depreciation, and amortization) is an important metric used in valuing comparable companies. It’s neutral to capital structure and widely accepted. The lower the ratio, the more undervalued the company is considered to be and vice versa. Also, the ratio removes any distortions due to accounting differences and taxes.
Meanwhile, EV and EBITDA can be adjusted to take into account the impact of operating leases, or chartered-in vessels. This would make for a fairer comparison between ship owners and ship owner-operators. EV/EBITDA can be used to value companies with the intention to take on debt to acquire strategic targets.
During the first quarter of 2014, Navios Maritime Acquisition Corp. (NNA) EBITDA recorded an increase of 28% to $143.5 million compared to the corresponding quarter a year ago. In comparison, its revenue increased 38% for the same period.
NNA’s EBITDA reflects disciplined growth, with almost $12 million of incremental annualized EBITDA estimated from the six vessels to be delivered or delivering within 2014. NNA forecasts further upside as the remainder of its fleet sees rewards in what it sees as an improving market.
EV to EBITDA
NNA’s forward 12-month EV to EBITDA stands at 9.4, compared to the 9.02, 9.62, and 11.7 recorded by Tsakos Energy Navigation Ltd. (TNP), Danaos (DAC), and Frontline Ltd. (FRO), respectively. Seemingly undervalued, NNA’s lower current EV to EBITDA compared to peers and the industry average provides room for growth opportunities. With lower vessel operating expenses and high cash flow to meet its debt obligations, NNA presents an attractive opportunity.