Are Investors Undervaluing Danaos (DAC) Right Now?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is Danaos (DAC). DAC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 2.11 right now. For comparison, its industry sports an average P/E of 4.26. Over the past 52 weeks, DAC's Forward P/E has been as high as 4.48 and as low as 1.88, with a median of 2.57.
Another notable valuation metric for DAC is its P/B ratio of 0.47. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.03. Over the past year, DAC's P/B has been as high as 1.06 and as low as 0.44, with a median of 0.61.
Finally, we should also recognize that DAC has a P/CF ratio of 1.65. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 2.74. Over the past year, DAC's P/CF has been as high as 1.96 and as low as 1.07, with a median of 1.64.
Another great Transportation - Shipping stock you could consider is Navios Maritime Partners (NMM), which is a # 2 (Buy) stock with a Value Score of A.
Navios Maritime Partners also has a P/B ratio of 0.34 compared to its industry's price-to-book ratio of 1.03. Over the past year, its P/B ratio has been as high as 0.62, as low as 0.31, with a median of 0.42.
Value investors will likely look at more than just these metrics, but the above data helps show that Danaos and Navios Maritime Partners are likely undervalued currently. And when considering the strength of its earnings outlook, DAC and NMM sticks out as one of the market's strongest value stocks.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Danaos Corporation (DAC) : Free Stock Analysis Report
Navios Maritime Partners LP (NMM) : Free Stock Analysis Report
To read this article on Zacks.com click here.