While geopolitical issues and supply chain disruptions affected shipping companies last year, stable demand helped them remain afloat. Given the solid long-term prospects of the industry, Triton International Limited (TRTN) and Castor Maritime Inc. (CTRM) might be worth buying.
The global cargo shipping market is projected to reach $4.20 trillion by 2031, growing at a CAGR of 7%. This is mainly driven by an increase in international marine freight transport, a rise in demand for cargo transportation through ships, and a surge in trade-related agreements.
Moreover, the global digital shipping market is expected to expand at a CAGR of 21.8% until 2027 due to rising consumer demand for quicker and more convenient services. Additionally, the global dry bulk shipping market is expected to expand at a CAGR of 7.9%, reaching $540.67 billion by 2028.
The container price sentiment index (xCPSI), a sentiment analysis tool by Container xChange that surveys supply chain professionals on their short-term price expectations, reached an all-time high at the beginning of April.
Let’s delve deeper into the fundamentals of the stocks.
Triton International Limited (TRTN)
TRTN is engaged in the acquisition, leasing, and sale of intermodal containers and chassis to shipping lines and freight forwarding companies. TRTN is headquartered in Hamilton, Bermuda. The company operates in two segments: Equipment Leasing and Equipment Trading. It operates in Asia, Europe, the Americas, Bermuda, and internationally.
On April 12, 2023, TRTN and Brookfield Infrastructure Partners L.P. ("BIP") (BIP), through its subsidiary Brookfield Infrastructure Corporation ("BIPC") and its institutional partners (collectively, "Brookfield Infrastructure"), announce a definitive agreement for Triton to be acquired in a cash and stock transaction valued at approximately $4.7 billion with a total enterprise value of approximately $13.3 billion.
Brian M. Sondey, Chief Executive Officer of Triton, said, “We believe this transaction provides an excellent outcome for all of Triton's stakeholders.”
TRTN’s forward EV/EBITDA multiple of 8.99 is 13.4% lower than the industry average of 10.39. Its forward non-GAAP P/E multiple of 8.89 is 45.6% lower than the industry average of 16.34.
TRTN’s trailing-12-month EBIT margin of 56.54% is 486.9% higher than the 9.63% industry average. Its trailing-12-month levered FCF margin of 60.48% is significantly higher than the 5.08% industry average.
TRTN’s total liabilities came in at $8.74 billion for the period that ended March 31, 2023, compared to $8.90 billion for the period that ended December 31, 2022. Also, its cash and cash equivalents came in at $92.83 million, compared to $83.23 million for the same period.
Analysts expect TRTN’s revenue to increase marginally year-over-year to $1.61 billion in 2024. Its EPS is expected to grow 4.3% to $9.79 in 2024. It surpassed EPS estimates in all four trailing quarters. The stock has gained 38.4% over the past year to close its last trading session at $83.45.
TRTN’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
TRTN has an A grade for Quality. Within the A-rated Shipping industry, it is ranked #19 out of 41 stocks. Click here for the additional POWR Ratings for Growth, Value, Sentiment, Momentum, and Stability for TRTN.
Castor Maritime Inc. (CTRM)
Based in Limassol, Cyprus, CTRM provides shipping services worldwide. The company operates through four segments: Dry Bulk Vessels; Aframax/LR2 Tanker; Handysize Tanker Vessels; and Containerships.
CTRM’s trailing-12-month EV/Sales multiple of 0.27 is 83.7% lower than the industry average of 1.64. Its trailing-12-month Price/Sales multiple of 0.23 is 82.3% lower than the industry average of 1.30.
CTRM’s EBIT margin of 47.14% is 389.4% higher than the 9.63% industry average. Its trailing-12-month CAPEX / Sales of 29.15% is 908.3% higher than the 2.89% industry average.
For the fiscal fourth quarter that ended December 31, 2022, CTRM’s total vessel revenues increased 15.5% year-over-year to $69.32 million. The company’s operating income increased 17.7% year-over-year to $35.94 million.
Its net income attributable to common shareholders increased 93.1% year-over-year to $33.68 million. Its EPS came in at $0.36, representing a 100% increase from the prior-year quarter.
CTRM’s shares have lost marginally intraday to close the last trading session at $0.64.
CTRM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It is ranked #16 in the same industry. It has an A grade for Value. To see additional CTRM’s rating for Growth, Stability, Sentiment, Momentum, and Quality, click here.
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TRTN shares were trading at $82.95 per share on Tuesday afternoon, down $0.50 (-0.60%). Year-to-date, TRTN has gained 21.87%, versus a 8.08% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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