Dry bulk shipping giant Golden Ocean Group Limited (GOGL) delivered a blowout third-quarter results, and rewarded its investors by raising its dividend by 70% to $0.85 per share.
GOGL shares jumped over 14% on November 24 to close at $9.12, and gained another 3% during the after-hours trading session. The outstanding results were driven by a strong freight rate environment resulting in impressive cash flow generation.
Based in Norway, Golden Ocean Group engages in the ownership and operation of dry bulk vessels. The company manages Newcastlemax, Capesize, Panamax, and Ultramax vessels.
The company transports bulk commodities, including ores, coal, grains, and fertilizers. It is also involved in the charter, purchase, and sale of vessels.
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Q3 Outperformance
Encouragingly, adjusted earnings of $0.97 per share almost quadrupled against $0.27 per share reported in the prior-year quarter. Furthermore, earnings nearly doubled sequentially compared to $0.52 per share reported in the prior quarter.
Similarly, revenues more than doubled year-over-year to $387.6 million against revenues of $185.5 million in the prior-year quarter. Meanwhile, revenues grew 42% against $279 million in the previous quarter.
Dividend Hike
Concurrent with the earnings announcement, Golden Ocean Group hiked its quarterly dividend by 70% to $0.85 per share from $0.50 paid earlier.
This is the third consecutive quarter of dividend payments to the shareholders. The company had suspended the dividend pay-outs near the end of 2019.
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CEO Comments
Golden Ocean CEO, Ulrik Andersen, stated, “The combination of expected global demand growth, modest fleet growth and inefficiencies we believe will persist in the coming years creates a powerful dynamic for Golden Ocean.”
He further added, “Based on our long-term market outlook and the successful execution of our fleet growth and renewal program, which has positioned the Company as the industry leader in the large size dry bulk segments, we expect to continue to deliver strong operating performance to the benefit of all stakeholders.”
Analysts Recommendation
The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 1 Buy and 1 Hold. The average Golden Ocean Group price target of $15.50 implies 69.96% upside potential to current levels. Shares have risen 111% over the past year.
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