Better Buy: Seanergy Maritime Holdings vs. ZIM Integrated Shipping Services

Headquartered in Haifa, Israel, ZIM Integrated Shipping Services Ltd. (ZIM) provides international container shipping and related services. The company offers seaborne transportation and logistics services. In comparison, Seanergy Maritime Holdings Corp. (SHIP), which is based in Athens, Greece, is an international shipping company that engages in the seaborne transportation of dry bulk commodities, primarily iron ore and coal, worldwide.

Thanks to a significant supply and demand imbalance exacerbated by the Russia-Ukraine war and China’s COVID-19 lockdowns, most marine shipping operators have witnessed solid demand. Furthermore, record freight rates due to high international demand for manufactured goods are helping maritime shipping companies expand their profit margins. Rapid digitization, automation in logistics, and growing cargo shipping services across industries are expected to drive the marine shipping market’s growth . According to a report by Market Research Future, the cargo shipping market is expected to grow at a 5.2% CAGR from 2022 to 2030. Therefore, both ZIM and SHIP should benefit.

Over the past month, ZIM has gained 7.8% in price, while SHIP has negative returns. Also, ZIM’s 36.8% gains over the past nine months are significantly higher than SHIP’s 3% returns. Furthermore, ZIM is the clear winner with 53.3% gains versus SHIP’s 14.1% returns in terms of the past year’s performance.

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On March 30, 2022, ZIM announced a new charter transaction with a group of investors initiated by MPC Capital AG. Eli Glickman, ZIM President & CEO, said, “We continue to advance our strategy of chartering in highly versatile vessels to strengthen our commercial prospects, maintain our flexibility and enhance our position as an innovative provider of seaborne transportation.”

On March 16, 2022, SHIP announced that it had completed marine biofuel trials in cooperation with one of its significant charterers, NYK Line, on one of the company’s Capesize Vessels. Stelios Psillakis, the SHIP’s Technical Director, said, “We strongly believe that using biofuels, in combination with the Energy Saving Devices installed or to be installed on our vessels, will cater for a smooth transition to greener energy, whilst providing a competitive and compliance advantage for early movers.”

Recent Financial Results

ZIM’s revenues increased 210% year-over-year to $3.72 billion for its fiscal first quarter, ended March 31, 2022. The company’s adjusted EBITDA grew 209% year-over-year to $2.53 billion, while its net income came in at $1.71 billion representing a 190% year-over-year increase. Also, its EPS came in at $14.19, up 190% year-over-year.

SHIP’s revenues increased 166% year-over-year to $56.70 million for its fiscal fourth quarter, ended Dec. 31, 2021. The company’s adjusted EBITDA grew 367% year-over-year to $90.15 million, while its net income came in at $27.90 million compared to a  $2.27 million loss in the prior-year quarter.

Past and Expected Financial Performance

Over the past three years, ZIM’s revenue and EBITDA have grown at  CAGRs of 48.9% and 268.2%. Analysts expect ZIM’s revenue to increase 39.7% for the quarter ending June 30, 2022, and 23.2% in its fiscal 2022. The company’s EPS is expected to grow 52.2% for the quarter ending June 30, 2022, but decline 4.9% in fiscal 2022.

In comparison, SHIP’s revenue and EBITDA have grown at CAGRs of 18.7% and 54.3%, respectively, over the past three years. The company’s revenue is expected to increase 38.7% for the quarter ending June 30, 2022, and 10.6% in its fiscal year 2022. Its EPS is expected to grow 400% for the quarter ending June 30, 2022, and 10% in fiscal 2022.

Profitability

ZIM’s  $10.73 billion trailing-12-month revenue is significantly higher than SHIP’s $153.11 million. ZIM is also more profitable, with an EBIT margin and net income margin of 54.09% and 43.25%, respectively, compared to SHIP’s 42.58% and 27.01%.

Furthermore, ZIM’s 190.77%, 57.28%, and 72.33% respective ROE, ROA, and ROTC  are higher than SHIP’s 24.31%, 10.41%, and 10.88%.

Valuation

In terms of forward non-GAAP P/E, SHIP is currently trading at 4.07x, which is 146.7% higher than ZIM’s 1.65x. Moreover, SHIP’s 3.93x forward EV/EBITDA ratio is 373.5% higher than ZIM’s 0.83x.

So, ZIM is relatively affordable here.

POWR Ratings

ZIM has an overall B rating, which equates to a Buy in our proprietary POWR Ratings system. In comparison, SHIP has an overall rating of C, which translates to Neutral. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

ZIM has an A grade for Value, which is consistent with its forward EV/S of 0.57x, which is 63.8% lower than the 1.57x industry average. However, SHIP has a C grade for Value, which is in sync with its 2.27x forward EV/S, which is 44% higher than the 1.57x  industry average.

Furthermore, ZIM has a B grade for Quality. This is justified given ZIM's 1.69% trailing-12-month asset turnover ratio, which is 111.7% higher than the 0.80% industry average. In comparison,  SHIP has a Quality grade of C, in sync with its 0.39% trailing-12-month asset turnover ratio, which is 51.1% lower than the 0.80% industry average.

Among the 46 stocks in the Shipping industry, ZIM is ranked #9. In comparison, SHIP is ranked #36.

Beyond what I have stated above, we have also rated the stocks for Momentum, Growth, Stability, and Sentiment. Click here to view all the ZIM ratings. Also, get all the SHIP ratings here.

The Winner

The marine shipping industry is expected to grow exponentially with increasing demand this year and beyond. While both ZIM and SHIP are expected to gain, we think it is better to bet on ZIM now because of its lower valuation and higher profitability.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Shipping industry here.

SHIP shares were trading at $1.18 per share on Thursday afternoon, up $0.04 (+3.07%). Year-to-date, SHIP has gained 33.92%, versus a -17.24% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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