Have you been paying attention to shares of Danaos (
DAC Quick Quote DAC - Free Report) ? Shares have been on the move with the stock up 43.3% over the past month. The stock hit a new 52-week high of $54.2 in the previous session. Danaos has gained 149% since the start of the year compared to the 8.7% move for the Zacks Transportation sector and the 46.6% return for the Zacks Transportation - Shipping industry. What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 16, 2021, Danaos reported EPS of $2.29 versus consensus estimate of $2.27 while it beat the consensus revenue estimate by 3.6%.
For the current fiscal year, Danaos is expected to post earnings of $14.18 per share on $563.34 million in revenues. This represents a 97.49% change in EPS on a 22.04% change in revenues. For the next fiscal year, the company is expected to earn $14.03 per share on $551.11 million in revenues. This represents a year-over-year change of -1.06% and -2.17%, respectively.
Danaos may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Danaos has a Value Score of A. The stock's Growth and Momentum Scores are C and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 3.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 3.7X versus its peer group's average of 3.8X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Danaos currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Danaos fits the bill. Thus, it seems as though Danaos shares could have potential in the weeks and months to come.
How Does Danaos Stack Up to the Competition?
Shares of Danaos have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Herc Holdings (
HRI Quick Quote HRI - Free Report) , XPO Logistics ( XPO Quick Quote XPO - Free Report) , and Saia ( SAIA Quick Quote SAIA - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Danaos. Still, the fundamentals for Danaos are promising, and it still has potential despite being at a 52-week high.