2024-04-29 01:30:32 ET
Summary
- Danaos is a Greek containership company witnessing underlying "business value" growing faster than its stock quote.
- Core enterprise value vs. tangible book value readings have reached DAC's lowest point ever and represent the cheapest proportion for any blue-chip transportation stock trading on Wall Street.
- The company is approaching zero net debt in early 2024 and is projected to achieve $70 for EPS during 2024-26 vs. a $74 share price today.
Danaos ( DAC ) is a Greek shipping company with 68 owned and/or operated containerships, mostly transiting goods to Europe, Asia and Australia. I wrote two bullish articles on the company last year ( June ) ( October ), starting at a share price of $60. Over the last 10 months, DAC has performed well for shareholders with a +21% total return vs. the equivalent-period S&P 500 gain of +18%. Nothing spectacular, yet I would have guessed this outcome as closer to a minimum return with the general equity market rising, based on all the accretive math for earnings and quickly rising tangible book value.
The bullish news is Danaos is even MORE undervalued today than in June 2023, against simple arithmetic calculations, accretive financial changes taking place, and the rising relative valuation level of all U.S. equities. Management continues to plug along in a conservative fashion: buying back shares, purchasing several new ships, paying a dividend, and reducing net debt....
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Danaos: The Valuation Math Still Heavily Favors Bulls