Flat earnings for Aegean Marine Petroleum Network

Posted by Tim

February 21, 2008

Aegean Marine Petroleum Network (ANW: 31.27 +0.06 +0.19%) is an international company of the growth persuasion that I have been positive about and is a component of this site’s 20 Stock Portfolio. The company has just released 4th quarter results and the stock is down over 10%. The primary reason is that earnings per share were down (15¢ vs. 19¢) from Q4 2006. It is disappointing because the share price had been recovering nicely since the January drop off.

I listened to the conference call, read the news release and have these thoughts about ANW. First of all, the company is still in a strong growth mode for their business. Here are a few facts:

Sales volume grew at a 42% rate through 2007, including the 4th quarter.
The company has 27 new double hull bunkering tankers on order for the next 3 years, which will bring the fleet to 44.
They acquired 2 companies doing business in the North Sea, Baltic and British Isles areas.
A new facility serving West Africa recently started service.

My read on the earning shortfall is that it is from 2 sources: First, the number of shares outstanding grew by 80% during the year thus diluting the net on a per share basis. And we do care about the per share! Second, expenses involved with opening new facilities, acquisitions and moving assets had a bigger than expected toll on the net earnings.

Aegean Marine Petroleum provides fuel for ships at 8 locations throughout the world. The fuel bunkering business is very fragmented and many small suppliers will be (or unable to) required to take their single hull tankers out of service in the next few years. ANW’s global reach also allows them the service large ship fleets world wide as a single source provider.

I believe ANW can be a double or triple play over the next few years. My average cost is a little over $36 per share and I may add to my position at these price levels.

Note: I have a long position in ANW.