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Should Value Investors Buy Danaos (DAC) Stock?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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.

Danaos (DAC - Free Report) is a stock many investors are watching right now. DAC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 2.28 right now. For comparison, its industry sports an average P/E of 3.57. Over the past year, DAC's Forward P/E has been as high as 5.30 and as low as 2.12, with a median of 3.45.

Another notable valuation metric for DAC is its P/B ratio of 0.53. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.10. Over the past 12 months, DAC's P/B has been as high as 1.19 and as low as 0.53, with a median of 0.79.

Finally, we should also recognize that DAC has a P/CF ratio of 1.07. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 3.05. Over the past 52 weeks, DAC's P/CF has been as high as 2.93 and as low as 1.07, with a median of 1.50.

ZIM Integrated Shipping Services (ZIM - Free Report) may be another strong Transportation - Shipping stock to add to your shortlist. ZIM is a # 2 (Buy) stock with a Value grade of A.

Additionally, ZIM Integrated Shipping Services has a P/B ratio of 1.30 while its industry's price-to-book ratio sits at 1.10. For ZIM, this valuation metric has been as high as 4.06, as low as -21.22, with a median of 1.83 over the past year.

These are just a handful of the figures considered in Danaos and ZIM Integrated Shipping Services's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DAC and ZIM is an impressive value stock right now.


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