What happened
Shares of ocean-going oil tanker company Nordic American Tankers(NYSE: NAT) tumbled 12.2% through 2:15 p.m. ET on Tuesday. The company reported its second-quarter earnings results, meeting analyst targets for earnings, but missing badly on revenue.
Heading into the quarterly earnings news, analysts had forecast that Nordic American would lose $0.02 per share on sales of $51.2 million. This morning, the company confirmed that its losses were only $0.02 per share -- but rather shocked the market with its revelation that revenue was only $34.8 million.
So what
And yet, the news wasn't all bad. Although Nordic American lost money for the quarter, for example, it lost a lot less money than it did in Q2 2021, when losses reached $0.14 per share.
Nordic American also noted that, despite the loss, it's getting ready to pay its shareholders its 100th straight quarterly dividend payout ($0.03 per share), and boasted that its debt remains among "the lowest debt levels among publicly listed tanker companies."
Now what
Be that as it may, in the absence of profits -- and Nordic American hasn't earned a quarterly profit in more than two years now -- debt levels are on the rise. At last report, Nordic American owed some $313 million in long-term debt, and a further $42 million in long-term debt that's coming due shortly. That's $355 million in all -- quite a lot for a company whose market capitalization is less than $480 million. In an era of rising interest rates, that debt load may be what's concerning investors today, over and above the fact that Nordic keeps losing money.
That being said, Nordic management remains optimistic about the future, pointing out that the average time charter equivalent (TCE) rate for chartering its ships passed $20,000 per day per ship in Q2, more than twice the $8,870 per day TCE seen in the first quarter. Although management made no promises in this regard, the fact that it says TCEs in the third quarter are already continuing to trend higher suggests the company could be close to earning a profit. Indeed, according to analysts polled by S&P Global Market Intelligence, Q3 2022 could turn out to be the first profitable quarter Nordic American Tanker has seen in more than two years.
Investors who are dumping the stock just before that happens may be selling at exactly the wrong time.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
