International Shipholding Corp (ISH) Valuation

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Company Profile (obtained from Google Finance): International Shipholding Corporation, through its subsidiaries, operates a diversified fleet of United States and International flag vessels that provide international and domestic maritime transportation services to commercial and governmental customers primarily under medium to long-term time charters or Contracts of Affreightment (COA). At February 28, 2009, it owned or operated 31 ocean-going vessels. It has four operating segments, Time Charter Contracts, COA, Rail-Ferry Service, and Other The Company’s fleet are deployed by its principal operating subsidiaries, Central Gulf Lines, Inc. (Central Gulf), LCI Shipholdings, Inc. (LCI), Waterman Steamship Corporation (Waterman), CG Railway, Inc. (CG Railway), Enterprise Ship Company, Inc. (ESC), and East Gulf Shipholding, Inc. (EGS). Other subsidiaries provide ship charter brokerage, agency and other specialized services.

ModernGraham Comments: None at this time.

Defensive and Enterprising Investor Tests:

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 2/7

1. Adequate Size of Enterprise – market capitalization of at least $2 billion – FAIL
2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
3. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
6. Moderate PEmg ratio – PEmg is less than 20 – PASS
7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests: Score = 4/5

1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
3. Earnings Stability – positive earnings per share for at least 5 years – PASS
4. Dividend Record – currently pays a dividend – PASS
5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary:

• Last updated 1/7/10
• MG Value = $144
• MG Opinion = Undervalued
• Value based on 3% Growth = $54
• Value based on 0% Growth = $32
• Market-implied growth rate = -0.13%
• Net Current Asset Value (NCAV) = $8.50
• Current Ratio = 1.64
• Price to Book Ratio = 0.99

Key Data:

Balance Sheet – 9/30/2009

• Current Assets    $161,670,000
• Current Liabilities    $98,720,000
• Total Debt    $101,260,000
• Total Assets    $495,440,000
• Intangible Assets    $730,000
• Goodwill    $0
• Total Liabilities    $264,010,000
• Outstanding Shares    7,410,000

Earnings Per Share – Diluted

• 2009 (estimate) – $5.72
• 2008 – $4.56
• 2007 – $1.41
• 2006 – $2.24
• 2005 – $0.66
• 2004 – $2.17
• 2003 – $0.94
• 2002 – ($0.02)
• 2001 – ($10.59)
• 2000 – $0.02
• 1999 – $2.28

Earnings Per Share – Modern Graham

• 2009 (estimate) – $3.75
• 2008 – $2.58
• 2007 – $1.55
• 2006 – $1.48
• 2005 – $0.28
• 2004 – ($0.44)

Valuation History:

• 1/7/10 – Value $144, Actual Price $30.40, Undervalued & Enterprising
• 9/26/09 – Value $135, Actual Price $29.89, Undervalued & Enterprising
• 6/24/09 – Value $147, Actual Price $23.43, Undervalued & Enterprising