With Oil Prices Surging, Is This Oil Transport Stock A Buy?

Nordic American Tankers Limited (NAT) is a tanker firm that buys and charters double-hull tankers in Bermuda and across the world. It owns and operates…

24 Suezmax crude oil tankers. Its shares have gained 18.9% year-to-date.

However, the stock is down 42.7% over the past year and 19.9% over the past month to close yesterday’s trading session at $2.01. Oil prices have soared back to levels seen during the early days of the Ukraine conflict, with little sight of major respite for drivers or companies in the near term. JPMorgan CEO Jamie Dimon believes oil prices will rise to $175 per barrel later this year.

NAT sold three of its 2002-built vessels in the first four months of 2022. While the firm has rebounded from its lows thanks to the current demand, its negative profit margins and widening loss could add to investors’ concerns.

Here’s what could shape NAT’s performance in the near term:

Inadequate Financials

NAT’s net voyage revenue declined 17.5% year-over-year to $15.52 million for the first quarter ended March 31, 2022. Its net operating loss surged 13.8% from the prior-year quarter to $20.92 million. The company’s net loss surged 7.8% from the year-ago value to $26.98 million. Its loss per share amounted to $0.14. In addition, its adjusted EBITDA came in at a negative $7.72 million, representing a year-over-year increase of 505.4%.

Negative Profit Margins

NAT’s trailing-12-month asset turnover ratio of 0.21% is 60.2% lower than the industry average of 0.53%. Also, its trailing-12-month ROA, ROC, and net income margin are negative 20.9%, 6.5%, and 92.3%, respectively. Moreover, its trailing-12-month gross profit margin stood at a negative 4.46% compared to its industry average of 39.5%.

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Premium Valuation

In terms of forward Price/Cash Flow, the stock is currently trading at 19.50x, 309.9% higher than the industry average of 4.76x. Also, its forward EV/Sales of 4.94x is 133.3% higher than the industry average of 2.12x.

POWR Ratings Reflect Bleak Outlook

NAT has an overall of…

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