Buying Euronav shares might be a good idea this January

Written by: Stanko Iliev
January 14, 2021
  • Euronav shares represent a very good opportunity for long-term investors
  • The company will weather the market headwinds due to its good financial position
  • Total revenue has increased above the expectations in Q3

Euronav (NYSE: EURN) shares are advancing this January, and investors in this company stand to gain a lot more for taking a comparatively smaller risk. Euronav has signed 10-year contract extensions with North Oil, and the company will weather the market headwinds due to its good financial position.

Fundamental analysis: Total revenue has increased by 37.5% in Q3

Euronav is one of the largest independent crude oil tanker companies globally; the company’s fleet includes FSOs, a V-PLus, VLCCs, and Suezmax vessels. Euronav is a founding member of the Tankers International VLCC pool, which operates the largest modern fleet of VLCCs available today, and according to analysts, this company represents a very good opportunity for long-term investors.

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Euronav reported Q3 results at the beginning of November; total revenue has increased by 37.5% Y/Y to $240M while Q3 GAAP EPS was $0.22 (beats by $0.03). Total revenue has risen above the expectations (+$26.95M), and the company declared a $0.09/quarterly share dividend.

The company’s NAV is around $10/share, and the management has in place a share repurchase program as part of its capital allocation strategy. If we compare the total stockholders’ equity of $2.4B and the market capitalization of $1.76B, we can notice that Euronav is not expensive and could be a good moment to buy shares.

Euronav shares are advancing at the beginning of January, and higher crude demand could lift this stock even more. The company has recently signed 10-year contract extensions with North Oil Company, and Euronav expects the contract to generate at least $645M in revenues by  2032.

Euronav is handling the coronavirus threat very well, and the company will weather the market headwinds due to its good financial position.

“A growing divide between rising short-term fleet supply and limited cargo availability, restricted by OPEC+ production cuts and a slower demand recovery for crude, has impacted the sector negatively and is likely to continue throughout the seasonal winter period. With our sector low leverage, supported by over USD 1 billion liquidity, Euronav is well-positioned to navigate these challenges and potentially seize value creative opportunities should they arise,” said Hugo De Stoop, CEO of Euronav.

This stock has a very good risk/reward ratio, and most financial analysts are also expecting its price to rise considerably in the next several years. 

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Technical Analysis: Euronav shares could advance above $9 this January

Data source: tradingview.com

Euronav shares have a very good risk/reward ratio, and investors in this company stand to gain a lot more for taking a comparatively smaller risk. The current supports levels are $8 and $7, $9, and $10 represent the current resistance levels.

If the price jumps above the $9 resistance, it would be a signal to trade Euronav shares, and the price next target could be around $10. If the price falls in the upcoming period, every price in a range from $6- $7 could be a very good opportunity to invest in Euronav shares.

Summary

Euronav has a very good risk/reward ratio, and most financial analysts are also expecting its stock price to rise considerably in the next several years. The current price level represents good value for what you pay, and maybe now could be a good moment to buy Euronav shares.