Genco (GNK)

Maritime shipping company Genco (NYSE:GNK) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 13% year on year to $79.92 million. Its non-GAAP loss of $0.01 per share was significantly below analysts’ consensus estimates.

Company Overview

Headquartered in NYC, Genco (NYSE:GNK) is a shipping company that transports dry bulk cargo along worldwide maritime routes.

The growth of e-commerce and global trade continues to drive demand for shipping services, presenting opportunities for marine transportation companies. While ocean freight is more fuel efficient and therefore cheaper than its air and ground counterparts, it results in slower delivery times, presenting a trade off. To improve transit speeds, the industry continues to invest in digitization to optimize fleets and routes. However, marine transportation companies are still at the whim of economic cycles. Consumer spending, for example, can greatly impact the demand for these companies’ offerings while fuel costs can influence profit margins. Geopolitical tensions can also affect access to trade routes, and if certain countries are banned from using passageways like the Panama Canal, costs can spiral out of control.

Competitors in the maritime transportation industry include Diana Shipping (NYSE:DSX), Eagle Bulk Shipping (NASDAQ:EGLE), and Safe Bulkers (NYSE:SB)

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Genco grew its sales at a sluggish 4.1% compounded annual growth rate. This fell short of our benchmark for the industrials sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Genco’s recent performance shows its demand has slowed as its revenue was flat over the last two years. We also note many other Marine Transportation businesses have faced declining sales because of cyclical headwinds. While Genco’s growth wasn’t the best, it did do better than its peers.

Genco also discloses its number of owned vessels, which reached 42 in the latest quarter. Over the last two years, Genco’s owned vessels averaged 2.2% year-on-year declines. Because this number aligns with its revenue growth during the same period, we can see the company’s monetization was fairly consistent.

This quarter, Genco reported year-on-year revenue growth of 13%, and its $79.92 million of revenue exceeded Wall Street’s estimates by 40.4%.

Looking ahead, sell-side analysts expect revenue to grow 11.7% over the next 12 months, an improvement versus the last two years. This projection is healthy and suggests its newer products and services will spur better top-line performance.

For industrials businesses, cost of sales is usually comprised of the direct labor, raw materials, and supplies needed to offer a product or service. These costs can be impacted by inflation and supply chain dynamics in the short term and a company’s purchasing power and scale over the long term.

Genco has best-in-class unit economics for an industrials company, enabling it to invest in areas such as research and development. Its margin also signals it sells differentiated products, not commodities. As you can see below, it averaged an elite 67% gross margin over the last five years. Said differently, roughly $67.01 was left to spend on selling, marketing, R&D, and general administrative overhead for every $100 in revenue.

This quarter, Genco’s gross profit margin was 38.4%, down 26.4 percentage points year on year. Genco’s full-year margin has also been trending down over the past 12 months, decreasing by 15.9 percentage points. If this move continues, it could suggest deteriorating pricing power and higher input costs (such as raw materials and manufacturing expenses).

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Genco has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 24.6%. This result isn’t surprising as its high gross margin gives it a favorable starting point.

Looking at the trend in its profitability, Genco’s operating margin decreased by 13.7 percentage points over the last five years. Many Marine Transportation companies also saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction. We hope Genco can emerge from this a stronger company, as the silver lining of a downturn is that market share can be won and efficiencies found.

In Q3, Genco generated an operating margin profit margin of 3.1%, down 30.9 percentage points year on year. Since Genco’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Genco’s full-year earnings are still negative, it reduced its losses and improved its EPS by 22.9% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

Sadly for Genco, its EPS declined by 46.6% annually over the last two years while its revenue was flat. This tells us the company struggled to adjust to choppy demand.

Diving into the nuances of Genco’s earnings can give us a better understanding of its performance. A two-year view shows Genco has diluted its shareholders, growing its share count by 1.4%. This dilution overshadowed its increased operational efficiency and has led to lower per share earnings.

In Q3, Genco reported adjusted EPS of negative $0.01, down from $0.41 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Genco’s full-year EPS of negative $0.14 will flip to positive $1.28.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Genco has shown terrific cash profitability, putting it in an advantageous position to invest in new products, return capital to investors, and consolidate the market during industry downturns. The company’s free cash flow margin was among the best in the industrials sector, averaging 21.7% over the last five years.

Taking a step back, we can see that Genco’s margin dropped by 21.8 percentage points during that time. If its declines continue, it could signal increasing investment needs and capital intensity.

Genco burned through $2.25 million of cash in Q3, equivalent to a negative 2.8% margin. The company’s cash flow turned negative after being positive in the same quarter last year, suggesting its historical struggles have dragged on.

Genco reported $89.95 million of cash and $163.9 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $76.62 million of EBITDA over the last 12 months, we view Genco’s 1.0× net-debt-to-EBITDA ratio as safe. We also see its $3.88 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by how significantly Genco blew past analysts’ revenue expectations this quarter. On the other hand, its EBITDA missed and its EPS fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 3% to $16.28 immediately after reporting.

Updated: December 3, 2025 at 10:39 PM EST

When considering an investment in Genco, investors should account for its valuation and business qualities as well as what’s happened in the latest quarter.

We see the value of companies helping their customers, but in the case of Genco, we’re out. First off, its revenue growth was weak over the last five years. And while its admirable gross margins indicate the mission-critical nature of its offerings, the downside is its declining operating margin shows the business has become less efficient. On top of that, its cash profitability fell over the last five years.

Genco’s P/E ratio based on the next 12 months is 15.8x. While this valuation is fair, the upside isn’t great compared to the potential downside. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $22.50 on the company (compared to the current share price of $19.08).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.