Navigator Holdings saw shares bounce up 12% on Christmas Eve, after receiving positive outlook from Mad Money commentator, Jim Cramer on Tuesday. Cramer says that Navigator Holdings Ltd has been unfairly punished due to the overall energy sector getting dumped. Navigator is a shipper of natural gas, and as the underlying price of the commodity dips -27.9% year to date, investors are worried that fewer shipping orders will be placed for the commodity. This sent shares of Navigator down -40% and Cramer believes “this is nothing more than lazy, slopping thinking”. Cramer further explained that “The reality is that Navigator Holdings has very little to do with oil prices, but investors get spooked out of the stock because they fail to understand that the value of the company’s ships is simply not correlated with energy prices”.
Navigator Holding’ downturn in shares
The first London Value Investor Conference was held in April 2012 and it has since grown to become the largest gathering of Value Investors in Europe, bringing together some of the best investors every year. At this year’s conference, held on May 19th, Simon Brewer, the former CIO of Morgan Stanley and Senior Adviser to Read More
The downturn in shares of Navigator certainly seems to be overdone, as is most of the energy sector. Aside from drillers and companies that are tied directly to the extraction, exploration, refining of oil and gas, they will likely continue to see downward pressure as supply has gotten out of hand and demand wanes. Weather has been mild and the forecast continues to point to warmer temperatures than normal, leading natural gas futures to sell off.
That being said, Navigator has fallen more than the price of natural gas and being that the shipper does ship other products than just liquefied natural gas, the sell off certainly is overdone.
Navigator fundamentals are relatively decent with a price to earnings of 12.79, forward price to earnings of 8.30, “buy” rating from analysts, 38.83% earnings growth projected next year, and profit margins of 20.80%. The company does have some debt that needs to be taken care of with a total debt to equity of .76 (.68 is long term debt), but with cash per share of 2.88, the company certainly will be able to pay its bills this year. Sales, quarter over quarter, rose 25.80% and earnings per share saw a bump of 66.70% during the same period. Despite having solid fundamentals, the stock certainly has been shunned by investors, in what appears to be just a drawdown of overall exposure to energy. While the energy situation is certainly out of whack and is not somewhere I would venture into at this time, the fall in Navigator Holdings is overdone and I think represents a good long term opportunity, particularly looking at forward price to earnings of only 8.30. While blindly following financial pundits is highly not recommended, Cramer certainly raises a good point here with Navigator Holdings Ltd.