Clarkson: A maritime powerhouse

Sticking with our theme of earnings season winners, this week we have Clarkson (CKN)…

Clarkson serves as a comprehensive solution provider across various facets of the maritime sector. With a headquarters located in St. Katharine’s Dock on the edge of the City of London, the company operates on a global scale, connecting key players in the shipping and offshore industries.

Clarkson’s business model covers five key areas:

1. Shipbroking:

Shipbroking is the core of Clarkson’s business. It involves acting as an intermediary between buyers and sellers of vessels, facilitating the transportation of commodities globally. Clarkson earns commissions or fees for brokering deals, whether it’s the sale or chartering of ships. The company’s extensive network and market expertise position it as a go-to broker in the maritime industry.

2. Research:

Informed decision-making is crucial in the maritime sector. Clarkson provides research services, collating information on global merchant shipping and offshore markets. Revenue is generated through subscriptions, consultancy services, and data feeds. Clients pay for access to valuable insights and market intelligence provided by Clarkson’s research arm.

3. Financial Services:

Recognizing the financial complexities of the industry, Clarkson offers financial services to ocean-going transportation companies, providing support and administration. Fees and commissions are earned through financial transactions, including assistance with financing, insurance, and other financial aspects related to maritime activities.

4. Technology:

Technology is at the forefront of Clarkson’s operations. The company integrates technology into all aspects of its business to drive positive change and innovation. While specific details may not be publicly disclosed, revenue is likely generated through the development and provision of technological solutions tailored to the maritime industry’s needs.

5. Port Services:

Port services involve various activities related to port operations, contributing to the broader logistics chain in maritime trade. Clarkson earns revenue through the provision of port services, which may include vessel agency, cargo handling, and other logistics-related activities.

Charting a course for growth: US dominance and sustainable frontiers

Clarkson has strategically positioned itself as a significant player within the United States. With a focused approach towards the US wind market, the company has aligned with the US government’s commitment to renewable energy.

Exceptional cash generation

Over the past five years, Clarkson has delivered an impressive 13.3% compound annual growth rate (CAGR) in revenue. Profitability echoes this strength, with a robust 17.3% CAGR in net profit over the same five-year period.

A debt-free balance sheet, fortified with £286 million in cash (TTM) underlines Clarkson’s quality. It also backs a dividend of 94p which is covered more than 2.9 times by earnings. And whilst the stock’s forward PE of 13.9 is high relative to its peer group, we believe this valuation reflects Clarkson’s quality.

Clarkson are set to release full year earnings on Monday March 4^th, and given January’s positive trading statement we expect these earnings to provide another positive catalyst to propel the shares higher.