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An Important Investing Note: Companies In The Same Business Can Have Massively Different Results

Stocks in similar businesses can at times have contrasting fortunes both in terms of their business results and share price changes. The pair of First Ship Lease Trust (SGX: D8DU) and Rickmers Maritime (SGX: B1ZU) provide a great example.

The duo are both business trusts that own a fleet of vessels that are chartered or leased out to companies that need to ship their physical cargoes around the world.

First Ship Lease Trust and Rickmers Maritime business results
Source: Trusts’ earnings results

The table above compares the two trusts – as you can see, they are in very similar businesses but yet had produced drastically different results. First Ship Lease Trust was able to grow its revenue and operating cash flow, churn out a profit, and reduce its debt. Rickmers Maritime on the other hand, had seen both its revenue and operating cash flow decline. It also suffered a loss and had reduced its debt by a smaller margin.

This big divergence in their business results have not gone unnoticed by the market. Since the release of First Ship Lease Trust’s earnings on 4 May 2016, its units have gained 21% in price. As for Rickmers Maritime, its units have declined by 21% in price since 30 April, the day it announced its latest results.

As investors, it’s worth keeping in mind that companies with very similar businesses can have huge differences in their business results.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Ong Kai Kiat doesn't own shares in any companies mentioned.