Should I invest in Euronav shares in February 2022?
- Euronav shares have weakened from their recent highs
- €7 represents strong support
- Euronav is expanding its fleet
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Euronav (STU: OCW) shares have weakened from €9.61 to €7.43 since October 19, 2021, and the current price stands at €7.80.
One of the largest crude oil tanker companies
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.
Oil tanker shares remain under pressure after the U.S. policymakers finally concluded that inflation pressures were not just transitory, and the U.S. Federal Reserve increased the reduction in bond-buying on a monthly basis from $15 billion to $30 billion.
Many other countries also reported that inflation rose at the highest level in the last several decades and lots of companies reported they had lost sales because of high inflation and supply problems.
The higher oil prices are also adding to inflationary pressures that, along with power outages, could lead to lower industrial activity and a slowdown in the economic recovery.
Euronav’s business also remains under pressure, and the company reported weak earnings results in November 2021. Total revenue has decreased by -58.9% Y/Y to $99.14 million, while the GAAP loss per share was -$0.53 (misses by $0.01).
The market suffered from an oversupply of vessels during the third quarter while the illicit trade around sanctioned Iranian barrels took away what would have been otherwise barrels required to be transported by the regulated fleet.
Despite the loss during the third quarter, the board of directors made a decision to distribute a $0.03 dividend per share.
Positive information is that the Organization of the Petroleum Exporting Countries reported that the oil demand should increase in the upcoming quarters to levels seen before the pandemic.
The anticipated progression in the market recovery in both supply of oil and the demand for oil should continue to drive tanker markets going forward.
Fundamentally looking, Euronav is a stable company; the company continues to invest in projects to drive increased cash flow, and with a market capitalization of €1.7 billion, shares of this company are reasonably valued. Brian Gallagher, Head of Investor Relations, added:
Our strong balance sheet has allowed us to simultaneously invest in the future. We’re expanding our core fleet, for instance, by 15% with eight anchored vessels, which will start delivery by the end of January 2022, and yet we retain a very conservative leverage ratio.
€7 represents strong support
Euronav’s stock price has fallen more than 15% after reaching the highest level in 2021 of €9.61 on October 19, and for now, bears remain in control of the price action.
If the price falls even more in the upcoming period, every price in a range from €5 to €6 could be a very good opportunity to invest in Euronav stock.
Euronav’s stock price has fallen more than 15% after reaching the highest level in 2021 of €9.61, and the risk of further decline is still not over. Euronav reported weak earnings results in November 2021, but the anticipated progression in the market recovery in both supply of oil and the demand for oil should continue to drive tanker markets going forward.
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