Analyzing the Crude Tanker Industry through NAT’s 2Q15 Results

Crude tanker industry

Since last year, oil prices (DBO) have fallen significantly, which has a positive impact on the crude tanker industry due to increased transportation demand and lower fuel costs. With increased tanker demand, tanker rates had risen to one of their highest points since 2008. However, since mid-July, tanker rates have taken a U-turn. We will analyze the third quarter outlook for the tanker industry below.

Analyzing the Crude Tanker Industry through NAT’s 2Q15 Results

Earnings vs. estimate

Nordic American Tankers (NAT) announced its 2Q15 results on August 10, 2015. The 2Q15 revenue for the company was high at $73.46 million compared to analyst estimates of $68.85 million. The company also recorded a higher EBITDA (earnings before interest, taxes, depreciation, and amortization) of $53.7 million than analyst estimates of $48.2 million. The stock market reacted favorably, and the share price jumped by 4.20%.

Teekay Tankers (TNK), which announced its results on August 6, also beat market estimates for revenue, but failed to meet EPS (earnings per share) estimates. Euronav (EURN), Tsakos Energy Navigation (TNP), and DHT Holdings (DHT) also announced their results a few weeks back. All three companies beat analyst estimates in terms of revenue.

Series overview

In this series, we will look at Nordic American Tankers’s (NAT) 2Q15 results. We will analyze the company’s current financial position and its management’s future plans.

Company overview

Nordic American Tankers is engaged in transportation of crude oil. It operates only one type of vessel—Suezmax.  It has increased its fleet from three to 22 Suezmax vessels in less than 11 years. The company states that its business model is based on high dividend payout and low financial risk.