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Is Danaos (DAC) Stock Undervalued Right Now?

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·2 min read
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  • DAC

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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.

Danaos (DAC) is a stock many investors are watching right now. DAC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

We should also highlight that DAC has a P/B ratio of 0.23. 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 0.44. DAC's P/B has been as high as 0.27 and as low as 0.08, with a median of 0.13, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DAC has a P/S ratio of 0.49. This compares to its industry's average P/S of 0.6.

Value investors will likely look at more than just these metrics, but the above data helps show that Danaos is likely undervalued currently. And when considering the strength of its earnings outlook, DAC sticks out at as one of the market's strongest value stocks.


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