Euroseas (ESEA), mcap=$168m, price $23.00 vs $26.04

– The operator of feeder and post-Panamax container ships.
– The vast majority of its vessels are under a contract providing cash flow visibility through 2024.
– Conservative SOTP valuation results in significant upside from contracted cash flows, newly ordered vessels at 50%+ discount, and scrapping of other vessels.
– Losing money from $26/share would require inane assumptions.

– SOTP valuation results in $346m ($47/share) base-scenario equity value composed of (1) $217m FCF during 2022-2024, (2) $143m in value (60% discount to purchase price) new vessels being delivered over the 2 years, and (3) $133m from scrapping every other vessel.
– The upside scenario ($77/share) assumes new vessels are worth the price paid.

Exp. gain: +80%-200% upside to $47-$77/share (by 2024)

Full ESEA write-up (free guest account required):

Leave a Comment