DryShips, Inc. (DRYS) is set to release its second-quarter 2013 results after the market closes on Aug 8, 2013.
In the last quarter, the company delivered a 0.00% earnings surprise. Let’s see how things are shaping up for this announcement.
Factors to be Considered this Quarter
DryShips continues to suffer losses although its top line improved significantly in the first quarter of 2013. We remain concerned since management provided a disappointing financial outlook.
DryShips declared that it does not foresee any improvement in the time charter rate for the rest of 2013. This is attributed to the sluggish growth in China, the world’s largest importer of coal and steel.
Solid performance by the company’s majority owned Ocean Rig deepwater oil drilling unit was more than offset by the tepid results of its drybulk shipping cargo division and oil tanker division. In 2013, both the drybulk shipping and the oil tanker industries are facing severe challenges as the vessel rate collapsed even below the rate during recession.
Our proven model does not conclusively show that DryShips is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.
Negative Zacks ESP: This is because the Most Accurate estimate is a loss 7 cents while the Zacks Consensus Estimate is a loss of 6 cents. This leads to an ESP of -16.67% for DryShips.
Zacks Rank #3 (Hold): DryShips’s Zacks Rank #3 decreases the predictive power of ESP.
We caution investors against the stock going into the earnings announcement, as a Zacks Earnings ESP of -16.67% combined with a Zacks Rank #3 lowers the possibility of an earnings surprise.
Other Stocks to Consider
Here are some other companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Ocean Rig UDW Inc. (ORIG) has Earnings ESP of +100.00% and carries a Zacks Rank #3 (Hold).
Costamare Inc. (CMRE) has Earnings ESP of +4.88% and carries a Zacks Rank #3 (Hold).
Baltic Trading Limited (BALT) has Earnings ESP of +18.75% and carries a Zacks Rank #2 (Buy).
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