Executive Summary / Key Takeaways

• Costamare Inc. (CMRE) has strategically sharpened its focus on the containership sector following the spin-off of its dry bulk business, leveraging a substantial contracted revenue backlog of $2.4 billion with a TEU-weighted remaining duration of 3.4 years as of Q4 2024.
• The company demonstrates robust financial health, with liquidity around $940 million as of Q4 2024, supported by disciplined capital allocation, including the redemption of high-cost preferred stock and strategic debt refinancing.
• Operational excellence, characterized by proactive chartering and efficient fleet management, underpins CMRE's ability to capitalize on market opportunities, such as the Red Sea crisis-driven demand, while maintaining a cautious stance on elevated asset prices for new builds.
• The spin-off of Costamare Bulkers Holdings Limited on May 7, 2025, streamlines CMRE's operations, allowing for a concentrated effort on its more stable, long-term contracted containership business, which is expected to enhance revenue visibility and reduce earnings volatility.
• While the containership market benefits from current geopolitical disruptions, potential normalization of trade routes and continuous new building capacity pose risks, necessitating ongoing vigilance in CMRE's strategic positioning and capital deployment.

Costamare's Enduring Voyage: A Strategic Evolution in Global Shipping

Costamare Inc., founded in 1974 and based in Monaco, has established itself as a significant player in the global marine shipping industry. The company's journey has been marked by strategic diversification and a commitment to operational excellence, initially spanning both containership and dry bulk sectors, alongside a more recent venture into maritime leasing. This foundational history has shaped its current strategic responses to dynamic market conditions.

The global shipping industry currently operates within a complex landscape, influenced by geopolitical events and evolving supply-demand dynamics. The Red Sea crisis, for instance, has significantly impacted containership charter rates by forcing diversions via the longer Cape of Good Hope route, effectively absorbing new building capacity and keeping the commercial idle fleet at remarkably low levels, around 0.6% to 0.8% during 2024 and early 2025. This disruption has been a primary driver for improved charter market conditions. Conversely, the dry bulk market experienced a softer period in late 2024 and early 2025, attributed to easing congestion, pressures in the China steel market, and reduced grain ton-mile demand, leading to tonnage oversupply. Looking ahead, broad industry trends, such as the increasing demand for infrastructure driven by AI and data centers, could indirectly boost shipping needs for components and raw materials, presenting long-term opportunities for companies like Costamare.

In this competitive arena, Costamare positions itself as a reliable chartering partner. Its primary competitive advantages stem from its extensive fleet and established relationships, which contribute to cost leadership through economies of scale. This translates into superior margins from efficient vessel utilization and fosters customer loyalty, generating recurring revenue from long-term contracts. For instance, Costamare's focused fleet management can lead to notably better capital efficiency by minimizing downtime. Against larger, more diversified competitors like A.P. Moller-Maersk (AMKBY), which offers integrated logistics, Costamare counters with specialized, cost-effective solutions, potentially enhancing its pricing power and improving gross margins in niche segments. Compared to Hapag-Lloyd (HPGLY), which relies heavily on alliances, Costamare provides more direct chartering options, likely increasing its market share in specific bulk shipping segments. While ZIM Integrated Shipping Services (ZIM) emphasizes spot market agility, Costamare's focus on long-term charters offers more predictable revenue streams.

Costamare's "technological differentiators" are rooted in its operational prowess and strategic application of data. The company employs efficient logistics and supply chain solutions, ensuring vessels are strategically deployed for timely deliveries and high service reliability. This operational technology, while not a proprietary hardware or software product, represents a sophisticated approach to fleet management that optimizes routes, minimizes idle time, and enhances overall service quality. The tangible benefits include improved vessel utilization rates and stronger customer satisfaction, which are critical for securing long-term charter agreements. Furthermore, Costamare utilizes Forward Freight Agreements (FFAs) as a hedging tool within its CBI dry bulk trading platform, a financial technology application that helps manage market volatility. While specific quantitative metrics for these operational technologies are not publicly detailed, their strategic intent is to contribute to Costamare's competitive moat by driving efficiency, reducing operational costs, and securing stable revenue streams, thereby enhancing financial performance and market positioning.

Financial Resilience and Strategic Capital Allocation

Costamare has demonstrated robust financial performance and a disciplined approach to capital management. For the full year 2024, the company reported net income above $290 million, or $2.44 per share, with adjusted net income reaching approximately $330 million, or $2.76 per share. In the fourth quarter of 2024 alone, adjusted net income was about $82 million. This strong profitability underscores the effectiveness of its chartering strategies and operational efficiency.

The company's liquidity stood at approximately $940 million as of the fourth quarter of 2024, a healthy position maintained after significant capital allocation moves during the year. These included the repayment of a €100 million fixed-rate bond and the redemption of $115 million in Series E preferred stock. The Series E Preferred Stock, being the most expensive at 8.875%, was redeemed to generate annual cash flow savings of approximately $10.1 million, highlighting management's focus on optimizing funding costs. Additionally, Costamare secured new financings of about $340 million for 36 of its 38 dry bulk vessels, which improved funding costs and extended maturities. A new "hunting license" of $100 million was also obtained for future dry bulk vessel acquisitions, indicating a proactive stance on growth opportunities.

Analyzing the latest TTM financial ratios, Costamare exhibits a Gross Profit Margin of 30.11%, an Operating Profit Margin of 24.77%, and a Net Profit Margin of 17.46%. Its EBITDA Margin stands at 32.29%. These margins reflect a solid operational efficiency, particularly in its asset-heavy business model. The company's Current Ratio of 1.68 and Quick Ratio of 1.64 suggest strong short-term liquidity, while a Debt/Equity Ratio of 0.82 indicates a manageable leverage profile. The P/E Ratio of 4.93 and P/S Ratio of 0.86, alongside a P/B Ratio of 0.77, suggest that Costamare may be undervalued relative to its intrinsic value and industry peers, with some analyses pointing to a significant discount. For instance, as of July 15, 2025, Costamare was trading at a Forward P/E ratio of 3.35, a notable discount compared to the industry average Forward P/E of 9.

Containerships: Anchoring Future Cash Flows

The containership segment remains a cornerstone of Costamare's strategy, particularly following the dry bulk spin-off. The company has demonstrated a proactive and successful chartering strategy, securing substantial contracted revenues and high fleet employment. In the fourth quarter of 2024, Costamare chartered 12 containerships on a forward basis, securing estimated contracted revenues of close to $330 million over an average duration of about 2.5 years. This builds on earlier successes, such as chartering seven containerships in Q3 2024, expected to generate over $165 million in incremental contracted revenues.

As of Q4 2024, the containership fleet employment stood at an impressive 96% for 2025 and 69% for 2026. Total contracted revenues for the containership fleet amounted to $2.4 billion, with a TEU-weighted remaining time charter duration of approximately 3.4 years. This robust backlog provides significant revenue visibility and stability, a key attraction for investors. The Red Sea crisis has played a pivotal role in maintaining firm charter rates, as diversions have absorbed new building capacity. However, management remains cautious, acknowledging that a gradual return to the Suez route could "distort the current supply and demand dynamics" by releasing tonnage. Despite this, as of Q4 2024, no immediate pressure on charter rates was observed, though the situation is considered fragile. Costamare has maintained a conservative approach to fleet renewal, refraining from new building orders due to historically high asset prices, which management believes would entail "excessive residual value risk". This disciplined capital allocation prioritizes risk management over aggressive expansion in an overheated market.

Dry Bulk and Leasing: Strategic Pillars in Transition

Prior to the spin-off, Costamare's dry bulk segment, encompassing its owned fleet and the CBI trading platform, was a significant part of its operations. The strategy for the owned dry bulk fleet focused on renewal and increasing average size, involving the opportunistic acquisition of larger Capesize and Ultramax vessels while disposing of older, smaller tonnage. For example, in Q1 2024, the company acquired five Capesize vessels (average age 12.5 years) and disposed of 10 smaller ships (average age 14 years). While the dry bulk market faced softness in late 2024 and early 2025, management noted that the forward curve pointed to a better market ahead.

CBI, the dry bulk trading platform, commercially managed a fleet of 51 ships in Q4 2024, predominantly on index-linked charter-in agreements. Management views CBI as highly complementary to the owned fleet and has a long-term commitment to the sector, with "absolutely no thought to scale it back". The goal for CBI is to maintain a "balanced book" and take opportunistic positions only when market conditions strongly justify them, a more balanced approach compared to its earlier operations. CBI actively uses FFAs as a hedging tool to manage market volatility.

A major strategic development occurred on May 7, 2025, with the completion of the spin-off of Costamare's dry bulk business into a standalone public company, Costamare Bulkers Holdings Limited (CBL). This transaction involved Costamare Inc. shareholders receiving one common share of Costamare Bulkers for every five Costamare Inc. common shares held as of April 29, 2025. This move allows Costamare Inc. to return to a more focused core container shipping business, which is characterized by long-term contracts and greater revenue stability, distinguishing it from the more volatile, spot-driven dry bulk sector. Gregory Zikos, Costamare Inc.'s CFO, will also serve as CEO of Costamare Bulkers, ensuring continuity and strategic alignment.

Beyond its core shipping operations, Costamare has also invested in Neptune Maritime Leasing (NML), a platform that provides financing for shipping assets, primarily through sale and leaseback transactions. NML has shown steady growth, with total investments and commitments exceeding $500 million by Q4 2024. Costamare's direct investment in NML stood at around $123 million as of Q4 2024. Management sees a healthy pipeline for NML and is willing to commit additional equity, potentially exceeding its initial $200 million target, depending on the availability of back leverage and the attractiveness of deals from a risk-return perspective.

Outlook, Risks, and the Investment Thesis

Costamare's outlook is shaped by its strong contracted revenue base in containerships and a disciplined approach to capital allocation. Analyst projections for 2025 indicate a mixed picture, with Zacks Consensus Estimates for full-year 2025 EPS ranging from $2.43 to $2.82, representing changes from -11.96% to +2.17% compared to the prior year. Revenue projections for 2025 are around $1.74 billion, a decrease from the previous year. These projections likely reflect the impact of the dry bulk spin-off and potential normalization in the containership market.

Key risks to the investment thesis include the potential for containership supply and demand dynamics to be distorted if liners gradually return to the Suez route, releasing tonnage that could combine with new building capacity. The continuous injection of new building capacity remains a principal threat to the containership market. Furthermore, the fragility and uncertain timeline for the normalization of trade routes through the Suez Canal introduce ongoing market volatility. Beyond market-specific risks, the shipping sector is exposed to broader geopolitical changes, economic uncertainties, and stricter environmental regulations, which could pressure margins and limit long-term revenue growth.

Despite these risks, Costamare's competitive positioning is strengthened by its operational efficiency and strategic focus. The company's disciplined approach to fleet management and chartering, coupled with its robust liquidity, provides resilience against market downturns. While direct quantitative comparisons with all competitors are challenging, Costamare's P/E ratio of 4.93 is considered good value compared to the US Shipping industry average of 8.4x and a peer average of 6.1x. This suggests a potential undervaluation, which, combined with its stable cash flows and 3-4% dividend yield, presents a compelling value proposition. The company's only newbuild orders are four 3,100 TEU containerships, expected for delivery in 2027, which will commence an 8-year charter with a leading liner company, marking its first newbuild order in seven years and underscoring a highly selective growth strategy.

Conclusion

Costamare Inc. stands at a pivotal point, having strategically refined its business model through the spin-off of its dry bulk operations to concentrate on its core containership fleet. This strategic pivot, anchored by a substantial backlog of contracted revenues and a disciplined approach to capital management, positions CMRE for enhanced stability and predictable cash flows. The company's operational "technology," manifested in efficient logistics and strategic fleet deployment, provides a competitive edge in a dynamic global shipping environment.

While the containership market currently benefits from geopolitical disruptions, the long-term investment thesis hinges on Costamare's ability to sustain its operational excellence and prudent capital allocation amidst potential market normalization and ongoing new building deliveries. The company's strong liquidity, coupled with its opportunistic yet cautious approach to fleet expansion and its growing Neptune Maritime Leasing platform, underscores a management team focused on healthy, risk-adjusted growth. For discerning investors, Costamare represents a compelling opportunity to invest in a financially robust and strategically focused shipping company, offering stable returns and a potential for revaluation as its streamlined, containership-centric narrative gains clearer recognition.