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Should Value Investors Buy Danaos (DAC) Stock?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company to watch right now is Danaos (DAC - Free Report) . DAC is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 2.32, which compares to its industry's average of 5.98. DAC's Forward P/E has been as high as 2.72 and as low as 2.01, with a median of 2.31, all within the past year.

We should also highlight that DAC has a P/B ratio of 0.47. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.35. Within the past 52 weeks, DAC's P/B has been as high as 0.54 and as low as 0.41, with a median of 0.48.

Finally, our model also underscores that DAC has a P/CF ratio of 1.92. 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. DAC's current P/CF looks attractive when compared to its industry's average P/CF of 7.12. Within the past 12 months, DAC's P/CF has been as high as 2.80 and as low as 1.58, with a median of 2.09.

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

Additionally, Safe Bulkers has a P/B ratio of 0.70 while its industry's price-to-book ratio sits at 1.35. For SB, this valuation metric has been as high as 0.71, as low as 0.44, with a median of 0.54 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Danaos and Safe Bulkers are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DAC and SB feels like a great value stock at the moment.


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