DANAOS CORPORATION (DAC): what the price assumes

boothcheck covers DANAOS CORPORATION (DAC) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/DAC

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 5.1% sits below it).

How unusual the bet is: n/a

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.7%); the inversion above states its own rate.

Per-Model Detail (n=16)

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Danaos rents ships rather than moving cargo, and as of March 31, 2026 its signed multi-year charters carried $4,056.4 million of contracted revenue, close to four years of current sales already under contract.
• The shipyard bill is the concentrated risk: 1,850.6 million dollars of remaining construction payments on 29 containerships and four bulkers, of which 568.7 million dollars comes due in the twelve months to March 2027, against a company the market values near 2.6 billion dollars.
• Dry bulk is the swing factor into the August 3, 2026 second-quarter report, where the time charter equivalent rate reached 24,825 dollars a day in the first quarter of 2026 against 10,513 dollars a year earlier while utilization in that segment slipped to 82.0% from 92.4%.

Bull Case

Value a containership owner with the standard toolkit and the toolkit answers a question this company does not ask. Most of those methods want to know where freight rates are going. Danaos does not carry freight. It owns the ships and rents them to the liner companies that do, on fixed-rate time charters signed years ahead, and the rent keeps arriving whether the box market is booming or not. As of March 31, 2026 the existing charter book carried $4,056.4 million of contracted revenue, with $734.9 million landing in the remainder of 2026, $934.7 million in 2027 and $2,386.8 million after that. Trailing revenue runs about $1.04 billion a year. So the signed book is worth roughly four years of sales, and about a year and a half of what the whole company is worth on the market.

The operating economics behind that book are unusually clean. Trailing operating margin ran 56.9%, which is what it looks like when the charterer pays for fuel and port costs and the owner's only job is to keep the vessel available. Availability is the whole game, and it is being won: container fleet utilization was 97.7% in the first quarter of 2026 against 97.2% a year earlier, while average daily operating cost fell to 6,680 dollars a vessel from 7,028 dollars, which the company attributes mainly to lower repairs and maintenance. Running costs falling while the fleet grows is the opposite of what scale usually does to a shipowner.

Capital allocation has been unambiguous about what management thinks the shares are worth. Under a repurchase authorization raised to $300.0 million, the company has bought 3,247,444 shares for $235.1 million, including 60,819 shares for $5.9 million in the first quarter of 2026, and it pays a regular quarterly dividend of $0.90 a share. The share count has come down about 2.7% a year over the four years to December 2025. A business retiring its own equity while that equity changes hands for less than the carrying value of the ships behind it is making the argument with money rather than with slides.

Meanwhile the fleet is getting both younger and larger. From 2022 through the first quarter of 2026 Danaos contracted 35 containerships totalling 232,948 TEU for about $2.7 billion and four Newcastlemax bulkers for $297.3 million, of which eight containerships had been delivered by March 31, 2026. Fully delivered, the fleet becomes 104 containerships of roughly 662,041 TEU alongside 15 bulk carriers. Then in January 2026 the company put $50 million of development capital into Glenfarne Alaska Partners and took the preferred tonnage provider role for at least six LNG carriers serving the Alaska LNG project. Whether that becomes a third business or an expensive option is genuinely unresolved. What is not in doubt is that it is being funded from a balance sheet that pays for itself.

Bear Case

Read the commitment schedule before reading anything else. As of March 31, 2026 the 27 container vessels and four bulkers still under construction carried $1,850.6 million of remaining contractual payments: $568.7 million due in the twelve months to March 2027, $778.8 million in the year after that, and $477.9 million in the one after that. Cash on hand at that date was 876.2 million dollars. The yard bill over the next three years is therefore roughly twice the cash balance and well over half the market value of the equity, and none of it is discretionary. The contracts are signed.

The funding answer is more borrowing, and it has already begun. In March 2026 the company entered six Japanese operating lease agreements with call options providing up to $578.0 million of financing for six container vessels, drawing $271.0 million that month and a further $100.0 million in April. Average indebtedness rose to $1,107.3 million in the first quarter of 2026 from $777.6 million a year earlier, and the interest bill rose to $11.9 million from $10.0 million even though the average cost of that borrowing fell. Worth noting alongside it: $7.2 million of interest was capitalized into vessels under construction during the quarter rather than charged against profit, up from $4.4 million a year earlier. That is ordinary accounting for ships being built, and it also means the cost of carrying the orderbook does not fully show up in results until the ships arrive.

What today's price already assumes is that this gets worse. The quote sits below what even a steady 5% a year decline in operating profit would warrant, so the market is not paying for growth here. It is discounting the durability of what already exists. The bear's job is to say why that discount might be correct, and the charter book supplies the mechanism directly. Container segment revenue fell 2.8% to $229.6 million in the first quarter of 2026, and the largest single component of that decline was $6.9 million of lower charter rates as vessels recontracted. A lease book looks safe right up until the leases roll.

Two structural pressures sit behind the roll. The first is counterparty quality: contracted revenue is only as good as the liner companies standing behind it, and the company says so itself, noting the figures depend on the ability and willingness of our charterers to meet their obligations under these charters. The second is supply, and it is the pressure Danaos is actively adding to. Twenty-nine newbuild containerships arrive into a market where the rest of the industry is ordering too, and INSW states the mechanism plainly in its own annual filing: additional vessels may cause spot charter rates to increase or decline, affecting INSW's revenues, profitability and cash flows, and the value of its vessels. For an owner whose shares trade below the carrying value of its fleet, the last clause of that sentence does as much damage as the first.

The downside is not unbounded, and the honest bear says so. Danaos holds about $268.6 million of equity stakes sitting outside the operating fleet, roughly a tenth of its market value, among them a position in Star Bulk Carriers that produced a $23.5 million fair value gain and $2.3 million of dividends in the first quarter of 2026. Those marks move with the dry bulk cycle rather than the container one, and they are real money that survives a bad charter market. They are also about a seventh of the construction commitments, which puts the floor in proportion.

Valuation

Begin with a formation that is genuinely uncommon. Run the standard families of method across this business and every one of them lands with its central estimate above where the shares trade: the asset lens, the earnings-power lens, peer multiples, and the cash-flow approaches alike. No family finds the price expensive. That result is rare enough to be worth a moment of suspicion, because when nothing calls a stock dear the usual explanation is not that the methods spotted something the market missed. It is that the market is applying a discount the methods have no way to encode.

Book value is the clearest version. The balance sheet carries $205.39 of equity per share, most of it ships, against a price of $139.70. Buyers are paying roughly two thirds of what the fleet is carried at, which is the market's long-standing view of shipping assets: steel that gets marked down across a cycle, owned by a company that cannot control what the vessels earn once the current contracts expire. The read on the price says the same thing from the opposite direction. It sits below what even a steady 5% a year decline in operating profit would warrant, meaning decline is already the base case embedded in the quote rather than a risk hanging over it.

Two filed facts push back. The decline has not arrived, for one: trailing operating margin is 56.9%, and $4,056.4 million of charter revenue is already contracted, $2,386.8 million of it dated beyond 2027. And the balance sheet is not the constraint a shipowner's usually is. As of March 31, 2026 the company held 876.2 million dollars of cash against 1,046.3 million dollars of borrowings, including 500.0 million dollars of 6.875% senior notes, having repaid the 262.8 million dollar 8.5% issue in full on March 2. Borrowings sit close to the cash balance. Against what the fleet produces, a quarterly interest bill of 11.9 million dollars is a modest claim.

Which leaves the question the whole valuation turns on, and it is not whether the shares are cheap against the ships. They are. It is whether a charter book that runs out is worth more or less than the yard bill that replaces it. The book covers about four years. The construction schedule runs $1,850.6 million over roughly the same stretch, and the vessels it delivers will be chartered at rates nobody has agreed to yet.

Catalysts

Second-quarter results land on August 3, 2026, and the announcement of that date came on July 22. The first quarter, reported May 12, 2026, split cleanly in two. Container revenue fell 2.8% to 229.6 million dollars, with 6.9 million dollars of that decline coming from lower charter rates and a further 7.2 million dollars from the timing of revenue recognition under US accounting rules, partly offset by 3.9 million dollars of newbuilding deliveries and 3.6 million dollars of better utilization. Dry bulk went the other way, up 40.9% to $24.1 million, on a time charter equivalent rate of 24,825 dollars a day against 10,513 dollars a year earlier. Those two lines moving in opposite directions is the thing to watch in August, because the dry bulk gain came with utilization falling to 82.0% from 92.4%, and one of those two numbers has to give.

The cash return continues on schedule. The board declared its second-quarter 2026 dividend on July 6, 2026, with an ex-dividend date of July 21. The two prior declarations, on February 9 and May 11, were each $0.90 a share, and buybacks have run alongside them under an authorization raised to $300.0 million in April 2025, of which $235.1 million has now been spent.

The orderbook keeps moving. Two 5,000 TEU containerships were added in early May 2026 for delivery in 2027, taking the containership orderbook to 29 vessels of 184,550 TEU, with three arriving in 2026, fifteen in 2027, seven in 2028 and four in 2029, alongside four Newcastlemax bulkers all due in 2028. Separately, the Alaska LNG partnership announced January 20, 2026 commits $50 million of development capital to Glenfarne Alaska Partners and names Danaos preferred tonnage provider for at least six LNG carriers. Nothing about that project is near revenue, but the delivery schedule above is, and it is the calendar that determines when the borrowing has to be arranged.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• CMRE (COSTAMARE INC.)
• FY2025 20-F: …can be more difficult to employ them on profitable time charters, particularly during periods of decreased demand in the charter market. Accordingly, we may find it difficult to continue to find profitable employment for our vessels as they age. 15 Table of Contents We face substantial competition from a number of…
• FY2025 20-F: …competition in both sectors. Participants in the container shipping industry include "liner" shipping companies, which operate container shipping services and own containerships, containership owners, often known as "charter owners", who own containerships and charter them out to liner companies, and shippers who…
• GSL (Global Ship Lease, Inc.)
• FY2025 20-F: …presented for each category of participating common shares under the two-class method. (w) Risks Associated with Concentration The Company is exposed to certain concentration risks that may adversely affect the Company's financial position in the near term: (i) The Company derives its revenue from liner companies…
• FY2025 20-F: 4 Table of Contents We will face substantial competition in expanding our business from a number of companies. Many of these competitors may have greater financial resources and a lower cost of capital than us, may operate larger fleets, may have been established for longer, and may be able to offer better charter…
• SFL (SFL Corporation Ltd.)
• FY2025 20-F: …are self-propelled, and can therefore easily move between geographic areas. Jack-up drilling rigs are not self-propelled, but it is common to move these assets over long distances on heavy-lift vessels. Therefore, the markets and competition for these rigs are effectively world-wide. Competition for charters in all…
• FY2025 20-F: …the international shipping and offshore drilling industries, types, sizes, sophistication and ages of vessels and drilling rigs, supply and demand for vessels and drilling rigs, availability of or developments in other modes of transportation, competition from other shipping companies, cost of newbuildings,…
• SBLK (STAR BULK CARRIERS CORP.)
• FY2025 20-F: · management of our accounting system and records and financial reporting; · administration of the legal and regulatory requirements affecting our business and assets; and · management of the relationships with our service providers and customers. The principal factors that affect our profitability, cash flows and…
• FY2025 20-F: …and varies according to their supply and demand. We compete with other owners of dry bulk carriers in the Newcastlemax, Capesize, Post Panamax, Kamsarmax, Panamax, Ultramax and Supramax size sectors. Ownership of dry bulk carriers is highly fragmented. We compete for charters on the basis of price, vessel location,…
• FRO (Frontline plc)
• FY2025 20-F: …between the larger refinery centers around the world, being the Gulf of Mexico, Middle East, Rotterdam and Singapore. We are committed to providing quality transportation services to all of our customers and to developing and maintaining long-term relationships with the major charterers of tankers. Increasing global…
• FY2025 20-F: …we wish to acquire additional vessels, the cost of acquisition may increase and this could adversely affect our business, results of operations, cash flow and financial condition. We may be unable to successfully compete with other vessel operators for charters, which could adversely affect our results of operations…
• TNK (TEEKAY TANKERS LTD.)
• FY2025 20-F: …expansion opportunities; • our dividend policy and ability to pay dividends on our common shares; • the crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the tanker market, changes in the world tanker fleet, changes in global oil and refined products demand, the…
• FY2025 20-F: …Industry and Competition We compete in the Suezmax (125,000 to 199,999 dwt) and Aframax (85,000 to 124,999 dwt) crude oil tanker markets. Our competition in the Aframax and Suezmax markets is affected by the availability of other size vessels that compete in these markets. Suezmax size vessels, LR2 (85,000 to 109,999…
• INSW (International Seaways, Inc.)
• FY2025 10-K: …and dynamics that have an impact on the Company's financial position and results of operations. ​ ● Results from Vessel Operations. This section provides an analysis of our results of operations presented on a business segment basis. In addition, a brief description of significant transactions and other items that…
• FY2025 10-K: "Business and Segment Reporting," to the Company's consolidated financial statements as set forth in Item 8, "Financial Statements and Supplementary Data," for additional information on the Company's segments, including reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted…
• FLNG (FLEX LNG Ltd.)
• FY2025 20-F: …and depressed freight rates, may severely affect the financial condition of charterers, and their ability to make charter payments, which could result in a material increase in the credit and counterparty risks to which we are exposed to and our ability to re-charter our vessels at competitive rates. If any of our…
• FY2025 20-F: …segment: vessel operations. The vessel operations segment relates to revenue generated from chartering of vessels to customers. Although separate vessel financial information is available, the CODM internally evaluates the performance of the Company as a whole and not on the basis of each vessel or charters. In…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.