Are Investors Undervaluing Danaos (DAC) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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.
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 stock to keep an eye on is Danaos (DAC). DAC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 4.43, while its industry has an average P/E of 8.23. Over the past year, DAC's Forward P/E has been as high as 4.43 and as low as 0.57, with a median of 1.32.
Finally, investors should note that DAC has a P/CF ratio of 4.64. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. DAC's current P/CF looks attractive when compared to its industry's average P/CF of 5.86. Over the past year, DAC's P/CF has been as high as 4.64 and as low as 0.32, with a median of 0.83.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Danaos is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DAC feels like a great value stock at the moment.
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