On March 24, 2009, DryShips Inc. (DRYS) reported 2008 fourth quarter results. DRYS posted diluted EPS before nonrecurring items of $0.25, down 94% year over year. This was below consensus of $0.66 and our $1.69 estimate, as revenues came in well below expectations.

Revenues decreased 9% year over year to $205 million as compared to $224 million for the same period in 2007, largely due to a 49% drop in TCE (time charter equivalent) rates, partly offset by a 3% increase in voyage days to 5,410 days.

We are slashing our 2009 diluted EPS estimate to $0.90 from $4.00, as we have revised our revenue assumptions down to account for substantially reduced spot rates as well as weak volumes due to the global economic slowdown. In addition, there is dilution as DRYS raised $380 million in equity through the sale of additional shares.

In other news, DRYS cancelled 17 vessel contracts worth $2.0 billion, received covenant waivers on $800 million in debt, eliminated the $0.20 quarterly dividend, and received a 3-year contract at for $630 million at Ocean Rig.

We are continuing our Hold recommendation on DRYS. The current Zacks rank for DRYS is 5, indicating near-term selling pressure on the stock. The shares were up 7.6% in trading on Thursday, closing at $5.11.

Read the full analyst report on “DRYS”
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