- Investors may be wondering whether International Seaways, at around US$70 a share, still offers value or if most of the opportunity is already priced in.
- The stock has returned 2.0% over the last 7 days, 3.7% over 30 days, 49.0% year to date and 120.8% over the past year, with a very large 5 year return that suggests long term holders have seen strong gains.
- These moves have kept International Seaways on many investors' radars, as shipping and energy related names remain in focus for portfolio builders. Persistent interest in the sector means the company often features in discussions about how to balance price, risk and long term potential.
- Simply Wall St currently gives International Seaways a valuation score of 3 out of 6. The next sections will walk through the different valuation methods behind that score, before finishing with a more holistic way to think about what the stock might be worth.
Approach 1: International Seaways Discounted Cash Flow (DCF) Analysis
The Discounted Cash Flow model estimates what a company might be worth by projecting future cash flows and discounting them back to today’s value. For International Seaways, this uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections.
The latest twelve month Free Cash Flow is about $136.3 million. Looking ahead, Simply Wall St uses analyst estimates where available, including projected Free Cash Flow of $403.6 million in 2024. It then extends those forecasts out to 2035 using its own assumptions. Over that period, individual annual Free Cash Flow projections generally sit in the tens of millions of dollars.
When all those future cash flows are discounted back to today and divided by the number of shares, the model suggests an intrinsic value of about $25.86 per share. Against a current share price of around $70, this implies the stock is roughly 170.7% above the DCF estimate, so on this model International Seaways screens as expensive rather than cheap.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests International Seaways may be overvalued by 170.7%. Discover 55 high quality undervalued stocks or create your own screener to find better value opportunities.
Approach 2: International Seaways Price vs Earnings
For profitable companies, the P/E ratio is a straightforward way to connect what you pay for the stock with the earnings the business is currently generating. It helps you see how many dollars investors are paying for each dollar of earnings.
What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk. Higher expected growth and lower perceived risk can support a higher P/E, while slower growth or higher risk usually align with a lower multiple.
International Seaways currently trades on a P/E of about 11.19x. That sits just below the peer average of 11.57x and below the Oil and Gas industry average of about 15.88x. Simply Wall St also calculates a “Fair Ratio” of 15.44x, which is the P/E it would expect for International Seaways after factoring in earnings growth, industry, profit margins, market cap and company specific risks.
This Fair Ratio is more tailored than a simple peer or industry comparison because it adjusts for the company’s own profile rather than assuming all Oil and Gas names deserve the same multiple. With the current P/E below the Fair Ratio, International Seaways screens as undervalued on this measure.
Result: UNDERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your International Seaways Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Narratives put a clear story behind the numbers by letting you connect your view on International Seaways revenues, earnings and margins to a financial forecast and a Fair Value. You can then compare that Fair Value with the current price to help decide whether to act. Each Narrative is hosted on Simply Wall St's Community page and is automatically refreshed when new data arrives. One investor might back a cautious Fair Value anchored around the bearish US$47 price target and assumptions of revenue declines and lower margins. Another might align with a more optimistic Fair Value closer to the bullish US$64 target that leans on higher revenue growth and margin expansion. Both of those stories are captured side by side so you can pick the one that best matches your own view.
Do you think there's more to the story for International Seaways? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com