Investing.com -- Evercore analysts noted that tanker companies under their coverage have reduced their average debt-to-capital ratios to near 25% by the end of this year, down from levels that often reached around 60% in the years surrounding the global financial crisis.

The firm tracks seven publicly traded tanker stocks, which have seen their average total debt-to-capital ratios fall below 40% in 2022 and below 30% in 2024. This marks a shift from the period between 2006 and the post-financial crisis years, when these ratios typically stayed above 50%.

Evercore has warned in recent weeks about a coming increase in newbuilding deliveries and what it describes as large gaps in stock valuations between companies paying high dividends and those with more conservative capital allocation approaches.

The analysts said that while stronger balance sheets do not fully protect stock prices during a market downturn, they do reduce the need for management teams to take steps such as forced asset sales or equity issuances to address cash flow concerns. The tanker stocks covered have risen between 35% and 61% year-to-date and between 57% and 117% from their 52-week lows.

The firm said the improved financial position could allow some companies to pursue large asset purchases during weaker market conditions.