Danaos Corp. (DAC, Financial), whose stock price just hit a new high, is a shipping company that looks like it could be a value opportunity. With a price-earnings ratio of 1.92, a forward price-earnings ratio of 3.83 and now trading at a 4% discount to book value, it would seem to qualify as cheap based on traditional value metrics. The price-sales ratio is low at 2.96 and the price-to-free-cash-flow ratio sits at 39.34.
The stock price has also been in quite an uptrend since its mid-2020 low of below $5; as of the writing of this article, it goes for $105.32. The rally from $70 at the beginning of this year is likely related to supply chain issues that affect shipping, as well as uncertainties in the Mediterranean region and globally about the ongoing war as Russia invades Ukraine.
The marine shipper, based in Greece, is having an extraordinary year with earnings up by 693%. The EPS growth rate for the past five years is 25.40%.
Analysts' expectations are muted for the coming year, however. The relatively high short float of 6.11% suggests a certain amount of doubt about the current higher prices. Perhaps Wall Street is expecting supply chain issues to improve and shipping prices to fall again.
Danaos has more shareholder equity than it does long-term debt, and the company’s current ratio is 2.00. Investors are paid a dividend of $3.00 per share for an annualized yield of 3.00%.
For a New York Stock Exchange-listed stock, Danaos is relatively lightly traded with an average daily volume of 482,000 shares. Insiders own 58% of the stock and there’s been no insider activity lately. Large institutional investors own 25% of the float.
The GuruFocus summary of the company’s financials shows four good signs, three medium warning signs and one severe warning sign:
Danaos Shipping is an example of a value stock now trading at new high prices, a good sign that some investors are noticing. However, it is highly cyclical in nature and dependent on the economy at large, so investors will want to proceed with caution when researching the investment potential.
