DANAOS CORPORATION (DAC): what the price requires

The current priced-in claim for DANAOS CORPORATION (DAC) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/DAC

Headline

FieldValue
TickerDAC
CompanyDANAOS CORPORATION
Current price$129.95/sh

What The Price Requires (Inversion)

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

FieldValue
Inversion basiswhole-company
Operating margin needed19.8%
Operating margin today56.9%
Margin compression implied-37.1pp
Multiple paid6x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration 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 4.7% sits below it).

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history-0.16σ
implied end-window share0%

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.

FamilyMedian price/FVModelsReads
Asset0.38x5justifies
Earnings0.44x5justifies
Relative0.35x3justifies
Growth0.72x4justifies

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 7.5%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$1326.480.10xyesFCF base $0.7B, growth 12% (input: historical growth), terminal g 4.0%, WACC 7.5%, 6yr projection
DCF Exit MultipleGrowth$365.250.36xyesExit EV/EBITDA: 4.0x / 3.8x / 5.8x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$373.230.35xyesP/E 13.94x (blended: static sector reference 20x + trailing (TTM) 5x), scenarios: 11.6x / 13.9x / 16.3x (bear / base = reference held flat / bull), EV/EBITDA 9.32x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$30.464.27xyesStage 1: -12% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$289.340.45xyesBV/sh $205.39, ROE (TTM) 13.0%, ke 9.3%
Two-Stage Excess ReturnAsset$340.550.38xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$120.671.08xyesRev $1.0B, growth 12% (input: historical growth; tapered), Terminal P/S: 1.9x / 2.3x / 2.7x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$292.520.44xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.53B × (1−21%) / WACC 7.5% → EPV (no growth)
Residual IncomeAsset$351.430.37xyesBV $205.39 + 5yr PV of (ROE (TTM) 13.0% − Kₑ 9.3%) × BV; BV grows 8.5%/yr
Graham NumberAsset$351.660.37xyes√(22.5 × EPS $26.76 × BVPS $205.39) — Graham's conservative floor
EV/EBITDA RelativeRelative$459.400.28xyesEBITDA $0.66B × sector EV/EBITDA 13.0x
FCF YieldEarnings$370.800.35xyesFCF $644.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$361.000.36xyesSBC-adj FCF $0.63B (FCF $0.64B − SBC $0.02B) capitalized at Kₑ
Ben Graham FormulaEarnings$22.435.79xyesEPS $26.76 × (8.5 + 2×-5.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$274.680.47xyesBV $205.39 × (ROIC 10.1% / WACC 7.5%)
P/Sales SectorRelative$112.821.15xyesRevenue $1.04B × sector P/S 2.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$289.300.45xyesEPS $26.76 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net cash$2.4m
Net debt / NOPAT (after-tax)-0.01x (net cash)
Net debt / operating income (pre-tax)0.00x
Interest coverage15.5x
Share count CAGR (buyback)-2.7%
Burning cashno

Bullet Takeaways

Bull Case

The most striking thing about Danaos is how far the price sits below where the methods value it, which is the opposite of most stocks. The asset-value methods, anchored on a stated book value of about $205 per share, place the equity at well above the current price near $125 (June 27, 2026). The earnings-power methods, capitalizing current profit, land above the price too. Even on a simple operating-income basis the price works out to roughly six times, a multiple so low it sits below what a steady annual decline in profit would justify. This is a business priced as if its cash flows are about to fall sharply, while the cash flows are in fact contracted years out. The market is applying a deep cyclical discount to a company whose near-term earnings are largely locked in.

The earnings are real and the cash flow is visible. First-quarter 2026 net income rose to $140.4 million, or $7.70 per diluted share, from $115.1 million a year earlier, on operating revenue of $253.7 million. The drybulk diversification is paying off: drybulk revenue jumped about 41% to $24.1 million on a time-charter-equivalent rate of $24,825 per day, more than double the prior year, offsetting softer container charter rates. And the backlog is the ballast: roughly $4.06 billion of contracted charter revenue as of the end of the quarter, including about $734.9 million for the rest of 2026 and $934.7 million for 2027, underpins the cash flow regardless of where spot rates go in the near term.

Capital allocation is aggressively shareholder-friendly, which is what a manager does when the stock is this cheap. Danaos has repurchased 3.25 million shares for $235.1 million under its buyback program and pays a quarterly dividend, most recently $0.90 a share. Retiring shares well below book value is directly accretive: each dollar spent buys back more than a dollar of net asset value. The company is also growing the fleet selectively, ordering Newcastlemax drybulk vessels and 5,000-TEU container ships, each backed by multi-year charters before delivery. A net-cash balance sheet, a multi-billion-dollar contracted backlog, double-digit per-vessel returns, and a buyback retiring shares below book describe a deeply discounted compounder, not a value trap.

Bear Case

The bear case is competitive and structural, and it is the reason the discount exists: containership leasing is a cyclical business where the supply of ships is set by the entire industry, not by Danaos. When charter rates are high, every owner, the large liner operators that own their own fleets, lessors like Costamare and SFL, and new entrants, orders new vessels. Those ships take two to three years to deliver, and they arrive in waves that depress rates precisely when the new capacity hits the water. Container charter rates already softened year over year in the first quarter, and the long shipbuilding cycle means a glut ordered today can pressure rates for years. Danaos cannot control the order book of its competitors, and an industry-wide newbuilding surge would weigh on the rates it can charge when its current charters expire.

The contracted backlog protects the near term but not the long term. The roughly $4.06 billion of contracted revenue is a powerful buffer, but charters roll off, and each vessel eventually returns to the market to be re-chartered at whatever rate prevails then. If rates are low when a ship comes off charter, the cash flow that vessel produces falls, and the stated book value that makes the stock look cheap is itself a function of vessel values that move with the cycle. A book value of $205 per share assumes ship values hold; in a deep containership downturn, both the charter income and the asset value compress together, which is exactly why the market refuses to pay book value for a shipping company at what may be a cyclical high.

The diversification into drybulk cuts both ways. Adding Newcastlemax bulkers spreads the company across two shipping markets, which smooths results, but it also means Danaos now carries exposure to a second cyclical freight market with its own oversupply dynamics. The drybulk strength that flattered the first quarter, with rates more than doubling, is itself cyclical and can reverse. What the price implies is essentially a bet that earnings decline from here, and the bear case is simply that the bet may be right: the contracted revenue runs out, the newbuilds across the industry arrive, and the rates on re-chartered vessels normalize lower. The deep discount is not a free lunch; it is the market pricing the next downturn.

Valuation

This report assigns no fair value and no target. It works backward from the $124.68 price to the assumption embedded in it, then measures the distance to each way of valuing the business.

The unusual feature is that the price sits below where most methods land, which marks a deep value read rather than a premium. Using the company's operating profit, the price works out to roughly six times, a multiple so low it sits below what even a 5% annual decline in operating profit would warrant. This is a bound, not a growth solve: the market is pricing in contraction, not expansion. The asset-value methods, against a stated book value of about $205 per share, say the equity is worth far more than the price; the earnings-power methods say the same. Only when you assume a sharp cyclical decline does the price make sense. That is the shape of a cyclical priced near a feared peak, where the market discounts the assets and the earnings because it expects both to fall.

The right frame for a shipping company is that peak charter rates are not sustainable charter rates, and the book value embeds vessel values that move with the cycle. The contracted backlog of about $4.06 billion is the thing that makes the near-term cash flow more certain than the multiple suggests, but it does not extend forever; the long-term value depends on the rates at which vessels re-charter as their current contracts expire. The trailing return on equity near 3% on a large book reflects how the methods read a high book value against a cyclical earnings stream. The bet a buyer makes at this price is that the cycle does not roll over as fast or as far as the discount implies.

Solvency is a genuine strength and bounds the downside hard. Danaos holds essentially no net debt, with liquid assets roughly matching gross debt, and interest coverage near sixteen times. For a cyclical, asset-heavy business, a net-cash balance sheet is the most valuable possible position: it means a downturn is something to be exploited, buying ships and shares cheaply, rather than survived. The contracted backlog plus the net-cash sheet give the equity a real floor well above zero. The price is paying for a discounted, asset-backed, contracted cash-flow machine; the downside is bounded by the cash, the backlog, and the vessel values, and the upside is the discount to book closing if the cycle holds.

Catalysts

The clearest catalysts are charter rates and the contracted backlog. Container charter rates softened in the first quarter while drybulk earnings jumped to about $24,825 per day, more than double a year earlier, lifting drybulk revenue roughly 41%. Because the company reports a contracted backlog of about $4.06 billion, including $734.9 million for the rest of 2026 and $934.7 million for 2027, each new charter signing and each rate print is a direct read on how the cash flow extends past the current book.

Capital return is a steady, observable catalyst. Danaos has repurchased 3.25 million shares for $235.1 million and declared a $0.90 quarterly dividend payable in June. With the stock trading below book value, continued buybacks are accretive, so the pace of repurchases is a signal of both management's conviction and the per-share value being created.

The fleet program is the forward growth event. Danaos has ordered Newcastlemax drybulk vessels for 2028 delivery and 5,000-TEU container ships for 2027, each backed by three-year charters before delivery. Each delivery adds contracted revenue, but the broader industry order book is the variable with the most leverage: the pace of newbuilding across all owners sets future charter rates, which makes the global supply cycle the catalyst that matters most over the long run.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

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.

Sources

Danaos Q1 2026 results release

View the full interactive DAC report on boothcheck