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Global Ship Lease (GSL) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Global Ship Lease (GSL - Free Report) ? Shares have been on the move with the stock up 1.5% over the past month. The stock hit a new 52-week high of $29.43 in the previous session. Global Ship Lease has gained 25.7% since the start of the year compared to the -5.1% move for the Zacks Transportation sector and the 27.5% return for the Zacks Transportation - Shipping industry.

What's Driving the Outperformance?

The stock has an impressive 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 March 2, 2022, Global Ship Lease reported EPS of $1.84 versus consensus estimate of $1.26 while it beat the consensus revenue estimate by 22.79%.

For the current fiscal year, Global Ship Lease is expected to post earnings of $7.78 per share on $596.1 million in revenues. This represents a 60.29% change in EPS on a 33.07% change in revenues. For the next fiscal year, the company is expected to earn $8.73 per share on $625.63 million in revenues. This represents a year-over-year change of 12.13% and 4.95%, respectively.

Valuation Metrics

Global Ship Lease 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 these give investors a variety of ways to comb 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.

Global Ship Lease has a Value Score of C. The stock's Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 3.7X current fiscal year EPS estimates, which is not in-line with the peer industry average of 4.3X. On a trailing cash flow basis, the stock currently trades at 4.9X versus its peer group's average of 4.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Global Ship Lease currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.

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 Global Ship Lease passes the test. Thus, it seems as though Global Ship Lease shares could have a bit more room to run in the near term.

How Does GSL Stack Up to the Competition?

Shares of GSL have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Pangaea Logistics Solutions Ltd. (PANL - Free Report) . PANL has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of C.

Earnings were strong last quarter. Pangaea Logistics Solutions Ltd. beat our consensus estimate by 37.14%, and for the current fiscal year, PANL is expected to post earnings of $1.09 per share on revenue of $673.38 million.

Shares of Pangaea Logistics Solutions Ltd. have gained 18.4% over the past month, and currently trade at a forward P/E of 5.02X and a P/CF of 7.73X.

The Transportation - Shipping industry is in the top 33% of all the industries we have in our universe, so it looks like there are some nice tailwinds for GSL and PANL, even beyond their own solid fundamental situation.


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