Two Big Supply Chain Crunch Winners Are About To Report

Seaborne shipping liners Star Bulk Carriers (SBLK) and ZIM Integrated Shipping (ZIM) report quarterly earnings on Tuesday and Wednesday, respectively, as high shipping costs from an ongoing supply chain crunch lift shipping stocks to record profits.

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Both companies will release results while ports and warehouses remain jammed as the holiday shopping season kicking into gear, and shipping containers and truckers remain hard to find.

Various shipping rates have come off their peaks, but remain well above year-earlier levels.

Shipping stocks were down on Monday.

Star Bulk Carriers Earnings

Estimates: Wall Street expects Star Bulk Carriers to earn $2.13 per share for the third quarter, a 661% gain, according to FactSet. Revenue was expected to increase 157% to $355 million.

Results: Star Bulk earnings are due late Tuesday.

Star Bulk shares fell 0.5% to 19.07 in the stock market today, hitting resistance at its 200-day line. SBLK stock has a 75 Composite Rating. Its EPS Rating is 64.

Star Bulk is based in Greece. It runs a fleet of 128 ships that transport materials like iron ore, grain, fertilizers and minerals.

Among other shipping stocks, Danaos (DAC), which reported last week, lost 2.2%. DAC stock has a 96 Composite Rating. Its EPS Rating is 72.

Management, during its earnings call in August, noted the price jump in iron ore, steel and other commodities, saying the increase “should incentivize a strong expansion in production and trade during the next years.”

They also noted demand for grain in China and an increase in steel production around the world, along with a strong export market for U.S. soybeans and corn. Pandemic stimulus programs, the company said, have lifted demand for those goods. The construction and energy sectors are rebounding after lockdowns and restrictions last year.

ZIM Integrated Shipping Earnings

Estimates: Wall Street expects ZIM, an Israel-based shipping-container liner, to report third-quarter earnings per share of $8.99, up 524%, with revenue of $2.708 billion, a 167% gain.

Results: Due Wednesday before the market open.

ZIM stock fell 1.7% to 49.36. The stock was in a consolidation, but is hitting resistance at its 50-day line.

Meanwhile, ZIM stock has a 98 Composite Rating. Its EPS Rating is 71.

Zim Integrated Shipping came public at 15 a share in late January, surging to 62.20 in September. Danaos owns a ZIM stock.

Shipping Costs Elevated

Shipping costs have skyrocketed over the past year, after a wave of online buying crashed into Covid restrictions at factories and ports. Businesses, preparing for an economic downturn, had to pivot to meet demand.

Amid the scramble to meet demand for imports in the U.S., shipping containers and other equipment haven’t always been where they needed to be. Nonetheless, holiday-season demand is expected to be strong.

“We expect retailers to target the sales inventory to sales ratio they had prior to the pandemic, which will continue to support the restocking trend especially as we enter into the traditional peak season for Christmas,” ZIM CFO Xavier Destriau said on ZIM’s earnings call in August.

“This in turn is expected to sustain strong demand for container shipping for the remainder of the year through the Chinese New Year,” he continued. 

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