Headquartered in Piraeus, Greece, Danaos Corporation (DAC) is a leading provider of container and dry bulk vessel services in Australia, Asia, and Europe. It offers seaborne transportation services by operating vessels in the containership and drybulk sectors of the shipping industry.

The company currently has a total fleet of 72 Container Vessels ranging from 2,200 TEU to 13,100 TEU and 10 Capesize Dry Bulk Vessels. Also, it has 15 Container Vessels under construction. Further, recently, it received delivery of its first three newbuilding containerships, including one 7,165 TEU and two 8,010 TEU vessels, and it had also added six newbuilding containerships to the order book.

Moreover, in July, the company added $616 million to its contracted revenue backlog and added an extra five newbuilding containerships to its orderbook.

Danaos declared a dividend of $0.80 per share of common stock during the second quarter, which was paid on August 29, 2024, to stockholders of record as of August 20, 2024.

Danaos’ CEO, Dr. John Coustas, said, “With respect to our activities in the dry bulk sector, we have recently taken delivery of all ten capesize vessels. We have been gearing up our operations to ensure the integration within our fleet during this building phase before we continue to explore opportunities to further our reach in this sector.”

He added, “Our revenues from the dry bulk sector have been steadily increasing, and we look forward to further diversifying our revenues and creating upside through the spot market exposure offered by the sector. Despite our recent fleet growth, renewal, and diversification activities, our balance sheet remains very strong, with a low net debt position.”

Shares of DAC have gained 11.3% over the past six months and 22.7% over the past year to close its last trading session at $78.84.

Let’s look at factors that could influence DAC’s performance in the upcoming months.

Stable Financials

For the second quarter that ended June 30, 2024, DAC’s operating revenues rose 2% from the prior year’s quarter to $246.31 million. The company’s income from operations for the quarter was $139.98 million. Also, its adjusted net income and adjusted EPS amounted to $132.31 million and $6.78 for the quarter, respectively.

Furthermore, net cash provided by operating activities increased 0.8% from the year-ago value to $154.28 million. The company’s cash, cash equivalents and restricted cash stood at $372.45 million as of June 30, 2024, compared to $271.81 million as of December 31, 2023.

Impressive Historical Growth

DAC’s revenue grew at a CAGR of 24.1% over the past three years, while its EBITDA improved at a CAGR of 25.6%. Its EBIT increased at a CAGR of 32.7% over the same period, while the company’s normalized net income and tangible book value grew at respective CAGRs of 40.5% and 24.1% over the same time frame.

Also, the company’s total assets increased at a CAGR of 8.1% over the same timeframe.

Favorable Analyst Estimates

Analysts expect DAC’s revenue for the fourth quarter (ending December 2024) to come in at $259.94 million, indicating an increase of 8.8% year-over-year and the consensus EPS is expected to improve 5.9% year-over-year to $7.40 for the same period. Moreover, the company has surpassed the consensus revenue estimates in three of the trailing four quarters.

For the fiscal year (ending December 2024), the company’s revenue is anticipated to grow 2.5% year-over-year to $986.93 million, while its EPS is expected to be $28.32.

High Profitability

DAC’s trailing-12-month EBIT margin and net income margin of 55.77% and 58.15% are 457% and 844.7% higher than the 10.01% and 6.16% industry average, respectively. Its trailing-12-month gross profit margin of 74.67% is considerably higher than the industry average of 31.57%.

Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 18.95%, 9.77%, and 14.20% are higher than the respective industry averages of 12.79%, 7.06%, and 4.95%.

Low Valuation

In terms of forward non-GAAP P/E, DAC is currently trading at 2.78x, 85.7% lower than the industry average of 19.51x. Likewise, the stock’s forward EV/Sales and EV/EBIT of 1.64x and 2.83x are considerably lower than the industry average of 1.85x and 16.03x, respectively.

Additionally, the stock’s forward Price/Book and Price/Cash Flow of 0.44x and 2.19x are 84.2% and 85.3% lower than the industry averages of 2.79x and 14.90x, respectively.

POWR Ratings Reflect Promise

DAC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. DAC has a B grade for for Stability, in sync with its 24-month beta of 0.57. It has a B grade for Quality, consistent with its higher-than-industry profitability.

DAC is ranked #13 among the 38 stocks in the A-rated Shipping industry.

Beyond what I have stated above, we have also given DAC grades for Growth, Sentiment, Momentum, and Value. Get access to all the DAC ratings here.

Bottom Line

DAC reported solid financial results in the last reported quarter. The company has a strong presence in the shipping business, and with its rapidly expanding fleet, it continues to expand its operations.

Also, with a diversified range of services and solutions and solid financial performance, the company is poised to grow in the market. Given its strong financials, accelerating profitability, lower valuation, and robust growth outlook, it could be wise to invest in this stock.

How Does Danaos Corporation (DAC) Stack Up Against Its Peers?

While DAC has an overall POWR Rating of B, investors could also check out these other stocks within the A-rated Shipping industry with A (Strong Buy) or B (Buy) ratings:

Global Ship Lease Inc. Cl A (GSL)

Dynagas LNG Partners LP (DLNG)

Overseas Shipholding Group, Inc. (OSG)

For exploring more A and B-rated Shipping stocks, click here.

What To Do Next?

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DAC shares were unchanged in after-hours trading Monday. Year-to-date, DAC has gained 11.31%, versus a 19.17% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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