148% Upside Potential with SBLK Stock?
Thanks to moderate dry bulk demand, the longer-term outlook for marine shipping companies like Star Bulk Carriers Corp (NASDAQ:SBLK) remains solid.
The dry bulk shipping market is projected to experience modest growth over the coming years due to an increase in demand for key commodities such as iron ore, coal, cement, sand, and grain.
In 2023, the global market for dry bulk shipping was worth approximately $157.8 billion. It’s forecast to hit $186.9 billion by 2030, expanding at a compound annual growth rate (CAGR) of 2.5%. (Source: “Dry Bulk Shipping Industry Business Analysis Report 2024-2030 Featuring Key Players – Oldendorff Carriers, Pacific Basin Shipping, and Star Bulk Carriers,” ResearchAndMarkets, January 16, 2025.)
Dry bulk shipping is the backbone of global trade, moving millions of tons of unpackaged bulk cargo across the oceans. Dry bulk shipping containers are different from other marine shipping vessels. While container ships are stacked with containers, dry bulk cargo is not packaged; rather, it is loaded/funneled directly into the vessel’s holds.
One of the biggest dry bulk carriers is Athens-Greece-based Star Bulk Carriers Corp. In fact, it is the largest dry bulk shipping company listed on the Nasdaq. Every year, Star Bulk ships more than 70 million metric tons of cargo across the world’s oceans. (Source: “Overview,” Star Bulk Carriers Corp, February 19, 2025.)
Star Bulk Carriers’ diverse fleet consists of 151 bulk carriers ranging from Supramax to Capesize, Panamax, and Newcastlemax vessels. That number is in flux. The shipper has seven newbuildings set for delivery over the next two years. It also sold three vessels in the fourth quarter, and it has agreed to sell one additional vessel in the second quarter of 2025.
Thanks to its diversity of vessel types, Star Bulk’s ships give it exposure to all cargo types and trade routes. For example, its Capesize vessels are mainly responsible for transporting cargo from the Americas and Australia to East Asia. Its Supramax vessels carry dry bulk between the Americas, Europe, Africa, and Australia, and throughout Asia.
Q4 Net Profit of $42.4 Million
For the fourth quarter ended December 31, 2024, Star Bulk announced that voyage revenue increased 17% on an annual basis to $308.9 million. (Source: “STAR BULK CARRIERS CORP. REPORTS NET PROFIT OF $42.4 MILLION FOR THE FOURTH QUARTER OF 2024, AND DECLARES QUARTERLY DIVIDEND OF $0.09 PER SHARE,” Star Bulk Carriers Corp, February 18, 2025.)
The company’s net income was up approximately seven percent at $42.4 million, or $0.36 per share. Adjusted net income fell to $40.6 million, or $0.34 per share. Net cash provided by operating activities slipped 14% to $76.2 million.
Star Bulk’s earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 14% to $106.2 million, while adjusted EBITDA was down nine percent at $103.8 million.
Time charter equivalent (TCE) revenues climbed 13% to $216.7 million. The daily TCE rate was down 12% at $16,129. Star Bulk ended the quarter with cash and equivalents of $436.2 million, compared with $259.7 million at the end of 2023.
For full year 2024, the company’s voyage revenue was up 33% at $1.26 billion, while net income jumped 75.5% to $304.6 million, or $2.67 per share. Star Bulk’s adjusted net income rallied 56% to $285.5 million, or $2.63 per share. TCE revenue advanced 36% to $931.5 million. The daily TCE rate grew 16% to $18,392.
The company noted that it has made significant progress in integrating its systems and processes with the recently acquired Eagle Bulk Shipping Inc. It has cumulatively reduced costs by $21.8 million since April 2024.
In the fourth quarter alone, Star Bulk reported $12.6 million in cost reductions—equivalent to an annualized run rate of over $50.0 million.
From a financing perspective, the shipper continues to benefit from strong interest from major financial institutions in terms of lending. Star Bulk has successfully raised new debt and refinanced existing facilities on highly attractive terms, reducing costs while extending maturities
Looking ahead, the company’s management noted that, while the first quarter is traditionally weaker and geopolitical issues remain, it is cautiously optimistic about the medium-term outlook for the dry bulk market.
Star Bulk Stock: Quarterly Dividend of $0.09/Share
In December, Star Bulk announced an amended dividend policy and share buy-back under a new share repurchase program. And the dividend amendment will have a material impact on payouts.
Under the new policy, the company may, at its discretion, allocate up to 60% of excess cash flow towards dividends, with the rest used for share buybacks, growth initiatives, and fleet renewal. (Source: “STAR BULK CARRIERS CORP. ANNOUNCES AN AMENDED DIVIDEND POLICY AND SHARE BUY-BACK UNDER A NEW SHARE REPURCHASE PROGRAM,” Star Bulk Carriers Corp, December 16, 2024.)
Star Bulk also cancelled the existing $50.0-million share repurchase program and initiated a new program of up to an aggregate of $100.0 million.
At the time, Petros Pappas, the company’s chief executive officer, said, “For the past several months, our share has been available for purchase at prices that appear to be more attractive than the corresponding prices for dry bulk vessels. We are amending the Company’s dividend policy to increase its flexibility to take advantage of this market inefficiency for the benefit of all shareholders.”
For the fourth quarter of 2024, Star Bulk’s excess cash flow was $17.6 million; this resulted in a dividend of $0.09 per share, or $2.40 on an annual basis, for a forward yield of 14.64%.
On the share repurchase front, the company spent over $7.4 million to repurchase 500,000 in Star Bulk stock in January.
Overall, it has repurchased approximately 900,000 shares since the renewal of its share repurchase program in December.
Does Star Bulk Stock Have 148% Upside Potential?
Pappas alluded to the fact that he thinks Star Bulk’s shares are undervalued. And that’s why the company ramped up its share buybacks. More share buybacks could be in the cards based on Star Bulk stock’s recent moves.
Before the shipper announced its fourth-quarter financial results, Star Bulk stock was up 9.5% year to date. The day after Star Bulk Carriers announced its financial results, Star Bulk stock was actually down 0.77% year to date.
Shareholders were not pleased with the dividend payout of $0.09 per share, which was significantly lower than the $0.60 per share paid out in the third quarter. However, the lower payout cannot have been a total surprise, at least not in light of the dividend amendment announcement in December.
The lower dividend payout and traditionally weaker first-quarter forecast sent SBLK shares down close to 10% on February 19. Despite the big one day overreaction, the outlook for Star Bulk stock remains robust, with Wall Street analysts providing a 12-month share price target range of $22.70 to $36.88. This points to potential gains in the range of 53% to 148%.
Wall Street remains optimistic about Star Bulk Carrier Corp’s outlook. After reporting adjusted earning per share of $2.63 in 2024, analysts expect 2025 adjusted earnings to slip to $1.81 per share in 2025 before jumping to $3.00 per share in 2026. There are high estimates of $2.77 per share and $3.99 per share for 2025 and 2026, respectively. (Source: “Star Bulk Carriers Corp. (SBLK),” Yahoo! Finance, last accessed February 19, 2025.)
Chart courtesy of StockCharts.com
The Lowdown on Star Bulk Stock
Star Bulk Carriers Corp is a marine shipping stock reporting solid financial results, including fourth-quarter revenue, earnings, EBITDA, and TCE revenue growth.
With its strong balance sheet, scale, and deep industry expertise, Star Bulk remains well positioned to capitalize on future opportunities and continue delivering value to its shareholders.
This includes the 276 institutions that hold 35.06% of all outstanding shares. Some of the biggest holders of Star Bulk stock include Oaktree Capital Management LP, Arrowstreet Capital, Limited Partnership, and Morgan Stanley.