The average target price of ASC is 14 and suggests 58% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 17.0. This translates into 89% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 11.0. This suggests 22% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Ardmore Shipping Corporation engages in the seaborne transportation of petroleum products and chemicals worldwide. As of February 15, 2022, the company operated a fleet of 25 double-hulled product and chemical tankers. It serves oil majors, oil companies, oil and chemical traders, chemical companies, and pooling service providers. The company was founded in 2010 and is based in Pembroke, Bermuda.

Bermuda

Ardmore Shipping Corporation

Industrials

The company tries to pay dividends regularly but only sometimes does so. It has paid dividends in roughly half the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. On average, the company pays dividends twice a year. 

ASC reported revenue of USD 406mn in the last 12 months, up 2% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 12% from FY23 to USD 3.08. Market expects EPS to reach USD 2.94 in FY25.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 37ppts over six months and grown 6ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported strong EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 39.5% in the last 12 months, a decline from 40.4% in FY23. 

Historically, ASC has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 32.8%, a growth from 29.5% in FY23. 

Ardmore Shipping Corporation reported a return on equity (RoE) of 22.0% in the last 12 months, up from 21.6% in FY23. The market consensus projects an RoE of 22.0% in FY24, again ahead of its peers. 

Another important profitability metric, return on assets (RoA), amounted to 19.1% in the last 12 months, an increase from 16.5% in FY23. The market analysts predict that RoA will be 18.3% in FY24, again stronger than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 20.0%, above the peers. The consensus estimate for FY24 for RoCE is 21.3%, again ahead of the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 2.8 in the past several years. This ratio implies a strong shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are moderate. In combination with weak business standards, only average protection of shareholder rights is ensured.

ASC has above average trading liquidity. The average private investor can sell his common position in the stock almost immediately. Liquidity is usually very stable and remains extremely favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is very high. Among the negative credit factors, we point to excessive margin volatility.

In highly turbulent market conditions, ASC is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, ASC is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from large to substantial. 

Based on key historical and expected multiples, the stock is undervalued relative to its peers. Specifically, the stock is 'cheap' on P/E, undervalued on EV/EBITDA, underpriced on P/FCF. 

Ardmore Shipping Corporation

$ 9.01

5

Ardmore Shipping Corporation

$ 9.01

5

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

$ 9.01

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