Global Ship Lease (GSL) Soars to 52-Week High, Time to Cash Out?

·3 min read

Have you been paying attention to shares of Global Ship Lease (GSL)? Shares have been on the move with the stock up 24.2% over the past month. The stock hit a new 52-week high of $19.8 in the previous session. Global Ship Lease has gained 58.5% since the start of the year compared to the 12.5% move for the Zacks Transportation sector and the 66.2% 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 May 12, 2021, Global Ship Lease reported EPS of $0.55 versus consensus estimate of $0.49 while it beat the consensus revenue estimate by 2.48%.

For the current fiscal year, Global Ship Lease is expected to post earnings of $2.62 per share on $332.24 million in revenues. This represents a 40.11% change in EPS on a 17.48% change in revenues. For the next fiscal year, the company is expected to earn $3.63 per share on $373.5 million in revenues. This represents a year-over-year change of 38.36% and 12.42%, 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 A. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 7.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 6.4X 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Global Ship Lease currently has a Zacks Rank of #2 (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 Global Ship Lease fits the bill. Thus, it seems as though Global Ship Lease shares could have a bit more room to run in the near term.


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