GASS - StealthGas: An Obscure Shipping Stock With Healthy Financials Trading At 0.5 PB

2024-02-06 08:01:37 ET

Summary

• StealthGas is a dominant player in the small gas carriers market, with an average fleet age of ten years.
• The small gas carriers have record low order book: 5% for 5,000-14,999 cbm and 1% for <4,999 cbm. About 30% of the fleet (3,000-8,000 cbm) is above 20 years.
• Financially, GASS is sound, with 23.2% total debt to equity, 21.1% total liabilities to total assets, and $73.2 million cash.
• 3Q23 net income reached $15.7 million, and for 9M23, $43.04 million. 3Q23 EPS is $0.41/share or 128% increase YoY.
• Despite a strong bull run, GASS remains deeply undervalued at 49% P/NAV, 2.03 EV/Sales, and 4.52 EV/EBITDA. The company still trades in the lowest percentiles compared to Global Energy and Global Equity.

Introduction

Dorian LPG (LPG), Avance Gas (AVACF), and BW LPG (BWLLF) dominate the large gas carriers market. Navigator Holdings (NVGS) leads in the Handysize segment. StealthGas (GASS) is one of the primarily small gas carrier owners. Like Handysize vessels, small gas carriers have record low order books, and a large percentage of the fleet is approaching scrap age.

GASS's average fleet age is ten years. The company maintains a robust balance sheet while renewing its fleet. In 3Q23 and 9M23, the company delivered strong figures with net revenue YoY growth of 15% and EPS YoY at 128%. GASS prioritizes share buybacks over dividends. In 3Q23, the company announced an additional $10 million for its share repurchase program....

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