2023-06-26 12:00:00 ET
Eagle Bulk Shipping (NYSE: EGLE) stock price jumped to a multi-month week high last week after the company made some major changes. The shares jumped to a high of $50.63, which was about 30% above the lowest level this year.
Important purchases Oaktree stake
Eagle Bulk Shipping is a major company in the dry bulk transportation industry. As the name suggests, the company carries commodities like coal and grains. Unlike other companies in the industry, Eagle is registered in the United States.
Eagle Bulk Shipping stock price has been in a recovery mode after it plunged to a low of $39.11 in June. It still remains about 27% below the highest level this year. It is not alone since other companies in the industry like ZIM Integrated have all retreated this year.
The most recent Eagle Bulk Shipping news was that the company decided to buy OakTree’s stake in the company. It repurchased 3.8 million shares for about $219 million. In a statement, the company’s CEO said that the transaction was in the best interest of all shareholders. It did that by eliminating potential disruptions from the sale of a very significant stake in the company.
The announcement came a month after the company published weak results. Its revenue came in at over $71 million, a near 50% decline from what it made in the same period in 2022. It ended the quarter with 53 vessels after it sold and delivered the oldest one in its fleet.
Eagle Bulk Shipping has over $155 million in cash against total debt of over $329 million, meaning that its balance sheet is fairly solid.
Some analysts have questioned the wisdom of buying out the Oaktree stake at a time when interest rates are rising. They argue that the poison pill is likely meant to prevent the company from being acquired by Danaos, a Gree-based company. Danaos has been accumulating Eagle Bulk Shipping stock for a while.
Is Eagle Bulk stock a good buy?
Most people who invest in dry bulk stocks do so for their dividends. Unlike in other industries, these dividends tend to be highly volatile because of the seasonality of the industry. Data compiled by SeekingAlpha shows that it has a TTM dividend yield of 9.72% and a forward yield of 0.93%.
Looking at the daily chart, we see that the Eagle Bulk Shipping stock price has made a steady recovery in the past few months. In this period, it moved slightly above the 25-day and 50-day exponential moving averages.
The stock jumped above the important resistance point at $42.77, the highest point on April 18th. Therefore, there is a likelihood that the shares will continue rising if bulls manage to move it above last week’s high of $50.63.
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