Ultrapetrol Bahamas Limited (ULTR), the South American shipper of agricultural products, minerals and crude products, reported first-quarter results on May 12 that easily beat the estimate, reporting 4 cents a share compared to the estimate of no profit.

However, revenue fell to $57.8 million from $67.4 million in the first quarter of 2008 as the company grappled with both the global economic crisis as well as a historic 70-year drought which caused a sharp decline in soybean volumes.

Volume in the river segment fell 9% year over year due to the reduction of iron ore that was loaded as mining companies slowed or even halted production in the quarter. However, some agricultural shipments picked up as volumes that should have shipped in the fourth quarter shipped in the first instead.

The company continues to try and sell its remaining passenger ship, the Blue Monarch, in order to exit that business segment. So far, there haven’t been any offers on the boat.

Ultrapetrol is partially hedged on its Capesize/OBO vessels which has smoothed out the rough patches of the recent downturn.

Unlike some of its peers in the shipping sector which find themselves unable to refinance debt, the company does not have any substantial principal repayments or refinancing to do on its credit facilities for several years.

2009 Estimates Move Higher

There’s only one analyst covering Ultrapetrol. Second quarter estimates were cut by 4 cents to 18 cents from 22 cents in the last month. However, the full-year estimate has risen to 54 cents from 51 cents per share.

Value Fundamentals

Ultrapetrol is now a Zacks #2 Rank (buy) stock. It is not quite as cheap as when I last reviewed it on April 9. It is now trading at 8.5x forward earnings compared to 4.8x earnings back in April.

Zacks Investment Research
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