Euroseas Limited ESEA continues to benefit from upbeat global trade and container shipping demand. ESEA shares have performed well on the bourses, gaining 49.7% year to date, handily outperforming its industry and other industry players like Seanergy Maritime Holdings SHIP and Frontline Plc FRO.

YTD Share Price Comparison

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Technical indicators suggest continued strong performance for ESEA. The stock trades above its 50-day moving average, signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment and confidence in ESEA’s financial health and prospects.

50-Day Moving Average of ESEA Stock

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In view of the northward movement of ESEA stock, investors must be wondering if they should lock in profits or buy the stock for more upside potential.

Let’s delve into the company’s fundamentals to determine the best course of action.

Red Sea Crisis Pushes Ocean Freight Rates Up: A Tailwind for ESEA

Euroseas is an owner and operator of container carrier vessels and a provider of seaborne transportation for containerized cargoes. The company has been benefiting from profitable contracts and maintains a time charter equivalent rate or TCE of more than $30,000 per day.

The Houthi militants' attacks on vessels passing through the southern Red Sea have crippled trade through the Suez Canal, driving many container shipping companies like ESEA to add 10-14 days to the voyages between Asia and Europe. The current Red Sea crisis has prompted the usage of more vessels. As a result, the crisis is causing a shortage of shipping containers.

Reduced container availability due to the Red Sea tensions has resulted in a rise in freight costs. Lower capacity has boosted earnings. Rates are likely to remain high for quite some time, which may translate into further upside potential for shipping stocks like ESEA.

Strong Q2 Results of ESEA

Last month, ESEA reported better-than-expected earnings per share and revenues for the second quarter of 2024. Revenues increased 26.4% year over year, driven by the increased time charter rates earned by the company’s vessels. The increase in the average number of vessels owned and operated in the second quarter of 2024 also resulted in an uptick.

In the June quarter, daily vessel operating expenses, including management fees but excluding drydocking costs, averaged $6,612 per vessel per day, down 7.1% year over year due to lower daily operating costs of the six new building vessels delivered within the past 14 months. This reduction aided the bottom line in the second quarter.