International Seaways (INSW): Valuation Insights Following $250M Bond Deal for Vessel Buybacks and Asset Control

International Seaways (INSW) just made a move that has investors tuning in. It has priced and completed a $250 million senior unsecured bond offering, with the funds targeted to repurchase six of its VLCCs currently under lease and to support broader corporate needs. This is more than a routine financing; it signals the company’s focus on capital management and long-term asset control. For shareholders, such decisions can shift the risk and reward profile, especially since repurchasing vessels outright can influence both costs and flexibility down the road. Looking at the stock’s journey, International Seaways has climbed 16% over the past month and 18% in the past three months, suggesting momentum has picked up since the start of the year. The total return for the year is a modest 4%, but the three-year gain is an eye-catching 92%, with five-year growth over fourfold. Alongside these numbers, annual revenue and net income have both shown steady improvement. So, is today’s pricing still attractive given the company’s bold approach, or is the market already factoring in the potential returns from this capital shift? Let’s see if there’s real value left to capture.

Most Popular Narrative: 9.5% Undervalued

According to the most widely followed narrative, International Seaways is currently seen as undervalued, trading at a notable discount to its fair value based on projected earnings and market drivers.

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. This approach is expected to reduce operating costs and support sustained or improved net margins. Tightening supply fundamentals are anticipated because the orderbook is not keeping pace with required fleet replacement. By 2029, nearly 50% of the global fleet will be over 20 years old and likely to be excluded from commercial trade, which could drive up vessel charter rates and future earnings.

Want to unravel the math behind this bullish outlook? The narrative is underpinned by bold forecasts for growth, margins, and a future profit multiple that might surprise even seasoned investors. Which assumptions are driving this value gap? Could the market be missing a key catalyst? The most interesting numbers are still under the surface.

Result: Fair Value of $53.5 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, shifting global energy demand or new environmental regulations could quickly upend these forecasts. This could potentially weaken utilization rates and compress margins.

Find out about the key risks to this International Seaways narrative.

Another View: What Does Our DCF Model Say?

Looking at the company through the lens of our DCF model, the valuation appears even more optimistic and suggests the shares are undervalued based on future cash flows. Is this model capturing something the market overlooks?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out International Seaways for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own International Seaways Narrative

If you see things differently or want to reach your own conclusions, you can build a fresh narrative from the ground up in just a few minutes. Do it your way.

A great starting point for your International Seaways research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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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.

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