DryShips Inc. (DRYS) Earnings: An Early Look

DryShips Inc. (NASDAQ:DRYS) stands out among its peers, though, having been punished even more than many of its peers. On a cyclically adjusted basis, the company sports a valuation multiple well below where rival Diana Shipping Inc. (NYSE:DSX) trades despite Diana’s similar challenges in the space.

DryShips hasn’t distinguished itself in its internal management. In January, it resorted to paying a counterparty $21 million to accept delivery of two unfinished ships that it had ordered but no longer wants. As long as the industry’s poor conditions continue, newly built ships will continue to produce little value for DryShips and its peers, and the industry needs a stop to new building in order for rates to stabilize.

The saving grace for DryShips has been its Ocean Rig subsidiary, which has tapped into the booming demand for deepwater drillships. But DryShips has been steadily selling off its remaining interest in Ocean Rig, with an offering last month sending its stake below the 60% mark.

In its quarterly report, look for DryShips to give ideas on how it can save its struggling business. With early optimism about the industry at the beginning of the year having faded to more pessimistic views, DryShips needs to quell the bad sentiment before its shares sink into the depths forever.

The article DryShips Earnings: An Early Look originally appeared on Fool.com.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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