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• Wondering if Star Bulk Carriers is offering real value right now? You are definitely not alone. With all the noise out there, it pays to dig deeper than just the headlines.

• After a strong run so far in 2024, the stock has gained 17.4% year-to-date, but it is still down 5.1% over the past year. This signals both renewed optimism and lingering questions about future growth.

• Recent news about global shipping demand and commodity price trends have helped drive attention back to dry bulk carriers like Star Bulk. Analysts point to shifting freight rates and ongoing supply chain adjustments as contributors to price swings. Investors have reacted quickly to these industry dynamics, causing both volatility and renewed interest in the stock.

• According to our valuation checks, Star Bulk Carriers scores a 4 out of 6 for being undervalued. This suggests there is more to unpack here. Next, we will break down how analysts measure this value and why there may be an even better approach to understanding a stock’s true worth by the end of this article.

Star Bulk Carriers delivered -5.1% returns over the last year. See how this stacks up to the rest of the Shipping industry.

The Discounted Cash Flow (DCF) model estimates a company’s worth by projecting its future cash flows and then discounting those amounts back to today’s value. This approach gives investors a sense of what Star Bulk Carriers might truly be worth based on expected, rather than historical, performance.

Star Bulk Carriers’ current Free Cash Flow stands at $283 million. Analysts provide estimates for the next several years, forecasting Free Cash Flow to reach $465 million in 2026 and $618 million in 2027. Beyond analyst coverage, projections continue to climb each year, according to Simply Wall St’s extrapolation, with Free Cash Flow expected to surpass $1.2 billion by the end of the next decade. All cash flows referenced are in US dollars, the company’s reporting currency.

According to this two-stage Free Cash Flow to Equity DCF model, the estimated intrinsic value of Star Bulk Carriers is $94.32 per share. Compared to the current share price, this means Star Bulk Carriers is trading at a steep discount; the model suggests the stock is 80.7% undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Star Bulk Carriers is undervalued by 80.7%. Track this in your watchlist or portfolio, or discover 870 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Star Bulk Carriers.

For profitable companies like Star Bulk Carriers, the Price-to-Earnings (PE) ratio is a widely used and meaningful valuation tool. It tells us how much investors are willing to pay today for each dollar of the company’s earnings, helping to gauge whether the stock appears cheap or expensive relative to its profits.

What counts as a “normal” or fair PE ratio can vary by industry, expectations for earnings growth, and the risks involved. Higher growth or lower risk businesses often command higher PE ratios, while slower-growing or riskier ones trade at lower multiples.

Currently, Star Bulk Carriers has a PE ratio of 16.7x. That is noticeably higher than the shipping industry average of 9.8x and also above the average of its peers, which sits at just 4.3x. This suggests that, on the surface, investors are paying a premium for Star Bulk compared to similar companies.

However, Simply Wall St introduces a more nuanced metric called the “Fair Ratio.” This proprietary measure considers Star Bulk’s unique growth profile, profit margins, risk factors, industry characteristics, and market cap, delivering a personalized target multiple. For Star Bulk, the Fair Ratio is calculated at 17.2x, which lands almost exactly where the current PE sits.

Compared to simple peer or industry comparisons, the Fair Ratio method better captures the full picture. It accounts for what actually makes Star Bulk unique and what it might reasonably be worth in light of its prospects and risks.

With the current PE ratio just shy of its Fair Ratio, the stock appears to be trading at about the right value using this metric.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1396 companies where insiders are betting big on explosive growth.

Earlier we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives—a smarter, more dynamic approach that brings your unique perspective into the valuation process.

A Narrative is simply your own story or thesis about a company, linking what you believe about its future (like revenue growth, earnings, and profit margins) to your forecast and ultimately to a fair value per share.

Instead of relying solely on standard models, Narratives help you combine everything from industry insights to news events and your personal expectations into a financial framework that is easy to follow.

This feature is available to all users on the Simply Wall St Community page, making it a widely used and accessible tool adopted by millions of investors.

By using Narratives, you can instantly compare your calculated fair value with the latest share price, helping you decide whether it might be time to buy, hold, or sell based on logic and your outlook.

What makes Narratives powerful is that they update dynamically as new information arrives. For example, when there is a big news event or fresh quarterly results, your valuation can adjust in real time.

For Star Bulk Carriers, one Narrative might highlight eco-friendly fleet upgrades and rising shipping demand to support a bullish target of $24.0 per share, while another, focused on structural demand risks and higher costs, leads to a more cautious $18.3 target.

Do you think there’s more to the story for Star Bulk Carriers? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include SBLK.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

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