On Monday, Evercore ISI updated its financial outlook for Capital Clean Energy Carriers Corp. (NASDAQ: CCEC), raising the price target to $25 from the previous $22 while maintaining an Outperform rating. The adjustment comes after the company reported a third-quarter adjusted EBITDA of $81.4 million, which fell short of Evercore ISI's projection of $97.4 million and the consensus estimate of $95.8 million.
The reported earnings were primarily affected by the accounting treatment of the sale of three containerships as discontinued operations. This sale, set to close in the fourth quarter of 2024 and the first quarter of 2025, resulted in the exclusion of revenue and EBIT from these ships in the current financials. Additionally, weaker than expected LNG spot rates led to reduced revenue from an LNG carrier on an index-charter, which is slated to commence a fixed-rate long-term contract in February.
The shortfall was further compounded by a rise in general and administrative expenses due to the transition from an MLP to a C-Corp structure. In light of these developments, Evercore ISI has revised its EBITDA forecasts for Capital Clean Energy Carriers. The new projections for 2025 and 2026 are now set at $342 million and $435 million, respectively, marking a decrease from the previous estimates of $372 million and $447 million.
Despite the downward revision in EBITDA forecasts, the analyst's outlook remains positive. The $300 million in net proceeds expected from the debt-free vessel sales will strengthen the company's balance sheet. This financial boost, along with the financing opportunities for its substantial newbuild orderbook, has led to the increase in the price target. Evercore ISI reaffirms its confidence in Capital Clean Energy Carriers with the sustained Outperform rating.
In other recent news, Capital Clean Energy Carriers Corp. has sold five of its container vessels for a total of $118.4 million as part of its strategic shift towards gas transportation. The sale is expected to result in a book gain for the company and the proceeds will be used for debt reduction and general corporate purposes. The company, which currently operates 12 LNG carriers, plans to expand its fleet in the coming years.
In addition to this, Capital Clean Energy Carriers Corp. has received an Outperform rating from Evercore ISI, reflecting its ongoing fleet expansion and strategic shift away from legacy containerships. The company's growth is contingent on securing favorable financing for nearly $2 billion in capital commitments through 2027 and successful contracting of new vessels.
The company reported a net income of $34.2 million for Q2 2024 and declared a cash distribution of $0.15 per common unit. As part of its new direction, the company has invested in 10 new gas carriers and refinanced the LNG carrier Aristidis I, releasing $54.8 million in additional liquidity.
InvestingPro Insights
Despite the recent EBITDA shortfall noted in the article, InvestingPro data reveals some positive aspects of Capital Clean Energy Carriers Corp.'s financial performance. The company's revenue growth stands at an impressive 29.66% over the last twelve months, with a robust gross profit margin of 75.58%. This aligns with one of the InvestingPro Tips, which highlights the company's "impressive gross profit margins."
Additionally, the company's dividend yield of 3.24% and the InvestingPro Tip indicating that CCEC "has maintained dividend payments for 18 consecutive years" may be of interest to income-focused investors. This consistent dividend history suggests a commitment to shareholder returns, which could be viewed positively in light of the company's ongoing transition and investment plans.
However, it's worth noting that another InvestingPro Tip cautions that the company "operates with a significant debt burden." This factor should be considered alongside the positive outlook from Evercore ISI and the expected proceeds from vessel sales mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Capital Clean Energy Carriers Corp., providing a deeper understanding of the company's financial position and market performance.
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