Global Energy Markets Will Sustain Tanker Demand Despite Challenges

Key Takeaways

• The company's eco-fleet and exposure to industry changes position it to benefit from tightening regulations, supply constraints, and shifting trade flows.
  
• Strong structural drivers support long-term revenue growth and protect against downside, with market dynamics favoring sustained fleet utilization and higher earnings.
  
• Structural shifts from decarbonization, cost inflation, regulatory demands, and technological changes threaten d'Amico's profitability, margins, and financial stability amid evolving tanker market dynamics.

Catalysts

Through its subsidiaries, operates as a marine transportation company worldwide.

• Analysts broadly agree that tightening environmental regulations and underinvestment in new capacity will constrain global tanker supply, but this impact may be even stronger than consensus implies, as d'Amico's eco-fleet is advancing toward a 90% eco-vessel mix by year-end, likely commanding an accelerating green premium and leaving the company exceptionally well-positioned for years of tightening rules, further boosting charter rates and net margins.
  
• Analyst consensus sees limited fleet growth supporting future earnings, but with only 36 MR/LR1 newbuilds projected for 2025-the lowest level since 2007-and accelerating vessel scrappage, the potential for an acute supply shock is rising. This could trigger a dramatic and sustained surge in spot rates and asset values, offering substantial upside to d'Amico's revenue and fleet NAV.
  
• The market may be underestimating the long-term demand uplift from emerging-market oil consumption and ongoing global reliance on refined products, particularly in Asia and Latin America, which should support consistently high fleet utilization and underpin durable revenue growth for d'Amico beyond cyclical upturns.
  
• Powerful industry shifts in global refining, with relentless expansion in Asia and Middle East and simultaneous closures in Europe and the Americas, are driving longer voyage distances and redistributing trade flows. This positions d'Amico's modern, versatile fleet to capitalize disproportionately on rising ton-mile demand, fueling top-line growth and higher TCE earnings.
  
• A significant tightening in sanctions enforcement and trade restrictions-already removing over 10% of tanker deadweight from compliant fleets-may intensify further with upcoming EU and possible US actions, creating structural inefficiencies in the global fleet that are likely to drive charter rates, boost d'Amico's earnings, and protect downside risk for years to come.

d'Amico International Shipping Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on d'Amico International Shipping compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming d'Amico International Shipping's revenue will decrease by 6.9% annually over the next 3 years.
• The bullish analysts assume that profit margins will shrink from 26.3% today to 16.4% in 3 years time.
• The bullish analysts expect earnings to reach $52.1 million (and earnings per share of $0.45) by about August 2028, down from $104.1 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 16.3x on those 2028 earnings, up from 4.9x today. This future PE is greater than the current PE for the GB Oil and Gas industry at 14.7x.
• Analysts expect the number of shares outstanding to decline by 1.33% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.92%, as per the Simply Wall St company report.

d'Amico International Shipping Future Earnings Per Share Growth

Risks

• Accelerating global decarbonization policies and rising adoption of electric vehicles are expected to structurally reduce oil demand, which would lead to long-term declines in tanker utilization and lower freight rates, potentially impacting d'Amico's revenues and earnings as the addressable market for petroleum product shipping contracts.
  
• Increasing regulatory stringency from the IMO and national governments, including possible future carbon taxes or stricter emission standards, could require significant investments for compliance or result in premature vessel obsolescence, thereby raising operating and capital expenditures while compressing net margins.
  
• The company faces rising maintenance and technical costs due to inflationary pressures on crew salaries, insurance costs driven by higher vessel values, and spare parts, as noted in the discussion of operating expenses; these cost increases could compress net margins over time, especially if not offset by higher TCE rates.
  
• While d'Amico's fleet is currently younger than the industry average, the delivery of four new LR1s in 2027 will require additional leverage and substantial capital outlays, raising the company's refinancing risk and exposure to interest rate fluctuations, which could negatively affect net earnings and financial stability in the event of weaker market conditions.
  
• Ongoing industry risks such as oversupply from newbuild deliveries in 2026–2027, potential technological disruption from new low-emission or autonomous vessels, and the continued cannibalization of the product tanker trade by Suezmax and VLCC newbuildings may erode market share and put downward pressure on charter rates, posing risks to both revenues and profitability.

Valuation

• The assumed bullish price target for d'Amico International Shipping is €5.46, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of d'Amico International Shipping's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €5.46, and the most bearish reporting a price target of just €3.87.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $318.8 million, earnings will come to $52.1 million, and it would be trading on a PE ratio of 16.3x, assuming you use a discount rate of 6.9%.
  
• Given the current share price of €3.83, the bullish analyst price target of €5.46 is 29.9% higher. Despite analysts expecting the underlying buisness to decline, they seem to believe it's more valuable than what the market thinks.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.