Clarkson (CKN): Should you add this shipping stock to your portfolio now?

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 Clarkson (CKN): Should you add this shipping stock to your portfolio now?
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Highlights

  • Clarkson witnessed an excellent business environment, and 2021 was a record year in terms of revenue and profitability.
  • The company’s business has a strong cash generation capability, and it holds a consistent dividend payout policy.

Clarkson Plc (LON: CKN), which offers services like shipbroking, finance, and investment banking facilities to the shipping industries, announced its preliminary results for the year ended 31 December 2021. The company witnessed an excellent business environment, and it was the record year in terms of revenue and profitability.

Clarkson’s total revenue increased by 23.8% to £443.3 million, with all business segments reporting growth. The company’s broking and financial division reported higher profits driven by the solid performance of the dry bulk & containers business and an active capital market.

Overall, the underlying profit before tax increased by 55.3% to £69.4 million, while its basic earnings per share stood at 165.6p per share. The company has a strong balance sheet with net assets of £361.6 million as of 31 December 2021. The free cash resource was at £92.3 million.

The FTSE 250 listed integrated shipping service providing company employs 1,600 people and has a presence in 23 countries. It is one of the largest shipping service companies and plays an important role in the movement of goods across the globe.

Following a good business performance, Clarkson anticipates similar industry dynamics along with higher freight rates in the upcoming years. Its forward order book is up by 42.2% to USD 165 million. The company’s management has recommended a final dividend of 57p per share after an upbeat revenue and profitability. The latest dividend will be paid on 27 May 2022 to all eligible shareholders.

Future business outlook

The company’s business has a strong cash generation capability. Moreover, the broking business of the company will continue to perform well amid supply/demand imbalance and shortage of shipping vessels after the post-pandemic economic recovery.

In addition, Clarkson has a consistent dividend payout policy and has increased its payout for 19 consecutive years. In 2021, it paid a total dividend of 84p per share, a rise of 6%.

Stock price performance

Clarkson Plc share price

(Image Source: Refinitiv)

After the result announcement, Clarkson’s stock witnessed good buying interest from investors. Its share price surged by 7.54% at GBX 3,350, with a day’s high of GBX 3,435 on 07 March 2022, and a market cap of £949.56 million. The stock has given over 24% returns to its shareholders in the last five years, while its current dividend yield stands at 2.8%.

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