Castor Maritime (NASDAQ:CTRM), a Limassol, Cyprus shipping company listed on the Nasdaq, now has a market capitalization of $309.45 million. This is because the company recently, on June 3, announced not only its first-quarter earnings, but also the total number of shares outstanding. And based on my calculations, CTRM stock is worth $3.38, and the stock is trading at $3.35 as of June 8.
Here are the two main points that I gleaned from the Q1 report from Castor Maritime. First, the company now has $189.2 million in cash. This is based on the report on page 3 that it received $125 million in cash from its April 7 equity capital raise. After adding the $64.2 million it had on its balance sheet, the total value of cash as of June 3 was $189.2 million.
The second point is that came out from its earnings report was that as of June 3, it had 89,955,848 million shares outstanding. This means CTRM now has a market capitalization of $301.35 million (i.e., $3.35 x 89,955,848 million shares). We can also use that info to determine the value of CTRM stock.
Valuing Castor Maritime
Given that Castor Maritime has $189.2 million in cash right now, and 89.96 million shares, the cash represents $2.10 per share. That is also equivalent to 62.78% of the CTRM stock price at $3.35 on June 8.
In addition, on page 9 of the quarterly shareholder report, the balance sheet shows that the company held ships worth $132.989 million. Its total non-current assets are worth $145.671 million. In addition, the company had $7.5 million in other current assets. So, adding this to its $189.2 million in cash as of June 3, the total assets are now worth $342.37 million.
Then, after deducting its total liabilities of $38.068 million, the net asset value (NAV) is now $304.303 million. Compare that to its market value of $301.35 million. The net asset value (NAV) is equal to $3.38 per share (i.e. $304.303 million / 89.9558 million shares).
So you can see that the market is closely valuing CTRM stock. There is no bargain element that I can determine. In addition, there is other good news. The company announced that it is now making a profit.
It made net income of $1.1 million for the quarter on $7 million in revenue. This was worth 2 cents per share. The company made $2.6 million in EBITDA (earnings before interest, taxes, depreciation, and amortization).
This implies that the company has an EBITDA margin of 37.1%. This is a very high margin. It shows that the company could easily be worth 10 to 15 times EBITDA. However, even at 15 times its annualized EBITDA of $10.4 million, the company would be worth $156 million.
After adding in the value of the net cash of $189 million less 38 million in liabilities, the total value is $307 million. Here is how that works out: $156 million for the shipping business at 15 times EBITDA plus $189 million in cash, minus $38 million in debt.
What To Do With CTRM Stock
So, either way, I think CTRM stock is worth just about its present price. Moreover, if the shipping company’s earnings grow, it could be worth much more over time.
However, the company is acquiring vessels at a dizzying pace. It is actually fairly difficult to keep up with its run-rate earnings and EBITDA. In addition, it has a number of warrants outstanding that will allow the company to raise some cash if the market price rises. The exercise price works out to $6.50 per share for 19.237 million shares. If CTRM stock rises to $6.50, it can sell those shares and collect another $125 million.
Overall, look for CTRM stock to slowly move up from here over time. But at the present time, it is trading for just about what it is worth on a NAV basis.
On the date of publication, Mark R. Hake did not hold a position in any security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.
