Last Update 09 Dec 25

INSW: Dividend Support Will Drive Bullish Returns Despite New Hold Rating

Narrative Update on International Seaways

Analysts have trimmed their price target on International Seaways by $0.67 to $57.00, reflecting a more cautious stance as recent research points to limited near term upside, while underlying valuation assumptions remain stable.

Analyst Commentary

Following the recent downgrade to Hold, analysts describe the new $57 price target as a reflection of a more balanced risk reward profile rather than a fundamental shift in the company’s long term outlook.

Bullish Takeaways

Bullish analysts note that the revised target still implies support for the current valuation, suggesting earnings power remains intact despite a more neutral stance.
Longer term demand for crude and product tankers is still viewed as favorable, underpinning expectations that cash generation can support shareholder returns and a resilient balance sheet.
Operational execution and fleet deployment are seen as disciplined, which supports confidence that management can navigate cyclical volatility and protect margins.
The Hold rating is interpreted by some as a pause rather than an end to the growth story, with potential upside if rate conditions or asset values improve more than currently embedded in forecasts.

Bearish Takeaways

Bearish analysts argue that much of the near term earnings strength is already reflected in the share price, limiting multiple expansion and constraining upside to the new target.
There is concern that tanker rates could normalize from elevated levels, pressuring forward estimates and leaving the stock vulnerable if demand softens or new capacity enters the market.
Slower catalysts for fleet growth or strategic initiatives are seen as reducing the pace of earnings acceleration, making it harder to justify a more aggressive valuation profile.
Some caution that, with expectations high relative to historical cycles, execution missteps or macro headwinds could lead to a derating if performance falls short of current consensus assumptions.

What's in the News

The Board declared a supplemental cash dividend of $0.74 per share, payable December 23, 2025 to shareholders of record as of December 9, 2025, signaling continued willingness to return capital. (Key Developments)
The company arranged a $23.75 million non convertible debt private placement, expected to fund on September 23, 2025 under Regulation D, broadening its financing resources. (Key Developments)
International Seaways closed a private placement transaction on October 7, 2025 with participation from four investors, further strengthening its capital position. (Key Developments)
Under its August 7, 2020 share repurchase program, the company has completed buybacks totaling 2,632,939 shares, or 5.26 percent of shares, for $75.64 million, with no additional repurchases between July 1 and September 30, 2025. (Key Developments)

Valuation Changes

Fair Value Estimate unchanged at approximately $57.67 per share, indicating no revision to the underlying intrinsic value assessment.
Discount Rate edged down slightly from 6.96 percent to 6.96 percent, reflecting a marginally lower perceived cost of capital with no material impact on the model.
Revenue Growth effectively flat at about 3.89 percent, with the update representing only a negligible numerical refinement rather than a directional change in outlook.
Net Profit Margin steady at roughly 37.62 percent, as the revision is limited to a minor rounding adjustment with no substantive shift in profitability expectations.
Future P/E unchanged at about 10.64x, signaling that valuation multiples embedded in the framework remain consistent with prior assumptions.

Expanding trade routes and tightening global vessel supply are set to boost tanker utilization, charter rates, and long-term earnings potential.
Fleet modernization and strong financial flexibility position the company to capitalize on environmental regulation shifts and market opportunities.
Structural shifts toward decarbonization and regulatory pressures threaten revenue stability, financial flexibility, and asset value due to declining demand, compliance costs, and volatile market exposure.

Catalysts

About International Seaways

Owns and operates a fleet of oceangoing vessels for the transportation of crude oil and petroleum products in the international flag trade.What are the underlying business or industry changes driving this perspective?

The continued eastward shift in refining capacity (with new Middle East and Asian refineries) and Western refinery shutdowns is expected to extend product shipping routes, increasing the number of ton-miles and driving higher product tanker utilization and revenues for International Seaways.
Ongoing geopolitical disruptions and sanctions-such as recent changes in Russian/Indian crude flows-are creating more complex and longer trade routes, boosting demand for crude and product tankers and potentially supporting higher future TCE rates and overall earnings.
The company's strategy of renewing and modernizing its fleet, including the acquisition of newbuild eco-vessels and selling older tonnage, positions it to benefit from stricter environmental regulations-reducing operating costs and supporting sustained or improved net margins.
Tightening supply fundamentals are anticipated, as the orderbook fails to keep pace with required fleet replacement-by 2029, nearly 50% of the global fleet will be over 20 years old, likely to be excluded from commercial trade, which could drive up vessel charter rates and future earnings.
Strong financial flexibility-reflected in ample cash/liquidity, conservative leverage (net loan-to-value under 15%), and access to long-term, low-cost financing-enhances the company's ability to capitalize on market upturns and return capital to shareholders, driving EPS growth and supporting valuation.

International Seaways Earnings and Revenue Growth

International Seaways Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming International Seaways's revenue will grow by 2.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 29.9% today to 34.1% in 3 years time.
Analysts expect earnings to reach $288.7 million (and earnings per share of $6.03) by about September 2028, up from $238.6 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $419.4 million in earnings, and the most bearish expecting $177.0 million.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 11.2x on those 2028 earnings, up from 9.8x today. This future PE is lower than the current PE for the US Oil and Gas industry at 12.6x.
Analysts expect the number of shares outstanding to grow by 0.35% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.19%, as per the Simply Wall St company report.

International Seaways Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The accelerating global energy transition and potential long-term decline in fossil fuel demand, driven by policy and electrification, could diminish the need for seaborne crude and product transport and structurally reduce revenues and vessel utilization in the coming decades.
Increasing regulatory scrutiny and environmental costs imposed on carbon-intensive shipping (e.g., IMO decarbonization mandates, carbon pricing) may raise compliance costs and require significant capital expenditure for fleet retrofitting or replacement, thereby pressuring net margins and net earnings.
Ongoing fleet aging, while currently managed by fleet renewal, exposes International Seaways to future risks of higher maintenance costs and impaired vessel values if capital markets tighten or newbuild financing becomes constrained as lenders shift away from fossil fuel sectors, negatively impacting liquidity and earnings.
Heavy reliance on spot market exposure in a secularly volatile and potentially declining tanker market could lead to significant fluctuations and eventual declines in revenues and cash flows during market downturns, especially if long-term demand weakens.
Geopolitical unpredictability and shifting trade patterns, including potential new sanctions, trade barriers, or shifts in global crude/product flows, may result in inconsistent demand and increased operational uncertainty, making future revenue streams and margin forecasts less reliable.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $53.5 for International Seaways based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $64.0, and the most bearish reporting a price target of just $47.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $848.0 million, earnings will come to $288.7 million, and it would be trading on a PE ratio of 11.2x, assuming you use a discount rate of 7.2%.
Given the current share price of $47.29, the analyst price target of $53.5 is 11.6% higher.
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.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Expanded Fleet and Share Buybacks Will Drive Demand and Efficiency