Aegean Marine continues to grow bunker tanker network

Posted by Tim

August 14, 2008

After last quarter’s earnings report I put forth the opinion that Aegean Marine Petroleum Network (ANW: 17.75 0.00 0.00%) had a stock price somewhat high in relation to earnings growth. Since then the stock has fallen from the low $40’s to the low $30’s. I do not know if it was my astute analysis or just crappy market conditions.

For the 2nd quarter the numbers are starting to look a little better. Net income per share of 23¢ is 64% improvement on Q2, 2007 and a nice 28% improvement on Q1, 2008. The 23¢ is pretty much in line with the estimates but the $741 million in revenues blows away the consensus of $616 million.

Aegean Marine is in the process of building a global network of ship refueling facilities and bunker tankers. This is a fragmented industry where many single hull tankers will need to be taken out of service and ANW can pick up business with their modern, double hull fleet. The plans are to double the bunker tanker fleet over the next two years to a total of 52 ships. During the 2nd quarter Aegean Marine acquired a North American service center adding to their facilities in Europe, Asia and Africa. In this respect, the company is well in its way to developing a dominant, global network in the ship refueling industry.

The big question remains where the share price will go. Earnings projections for the next 6 quarters show year over year 100% increases for each quarter. The current share price is still a rich 42 times the last 4 quarters earnings, but if you believe the estimates only 14 times projected 2009 earnings. The question remains when earnings will actually start to ramp up and when to jump on the stock? A quarter ago, I recommended picking up the stock under $30. At this point, the current price may prove to be a good entry point. ANW is a component of this site’s Opportunities Portfolio and I will continue to provide quarterly update on the stocks in the portfolio.

Note: I currently do not have a position in ANW.

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