Will Alkermes Plc shareholders switch to Danaos (USA Stocks:DAC)?

DAC Stock  USD 52.50  0.50  0.94%   
As many investors are getting excited about marine space, Danaos and Alkermes Plc may be going in opposite directions. We are going to discuss some of the competitive aspects of both Danaos and Alkermes.
Published over a month ago
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Reviewed by Michael Smolkin

By analyzing existing basic indicators between Danaos and Alkermes, you can compare the effects of market volatilities on both companies' prices and check if they can diversify away market risk if combined in one of your portfolios. You can also utilize pair trading strategies for matching a long position in Alkermes with a short position in Danaos. Check out our pair correlation module for more information.

Let's begin by analyzing the assets.
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Danaos has an asset utilization ratio of 19.01 percent. This indicates that the company is making $0.19 for each dollar of assets. An increasing asset utilization means that Danaos is more efficient with each dollar of assets it utilizes for everyday operations.

How important is Danaos's Liquidity

Danaos financial leverage refers to using borrowed capital as a funding source to finance Danaos ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Danaos financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Danaos's total debt and its cash.

How does Danaos utilize its cash?

To perform a cash flow analysis of Danaos, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Danaos is receiving and how much cash it distributes out in a given period. The Danaos cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.
Danaos Net Cash Flow from Operations is projected to increase significantly based on the last few years of reporting. The past year's Net Cash Flow from Operations was at 934.74 Million

Breaking down Danaos Indicators

Revenue is income that a firm generates from business activities such us rendering services or selling goods to customers. It is a crucial part of a business and an essential item when evaluating a company's financial statements. Revenues from a firm's primary business operations can be reported on the income statement as sales revenue, net sales, or simply sales, depending on the industry in which a given company operates.
Revenue is typically recorded when cash or cash equivalents are exchanged for services or goods and can include product or services discounts, promotions, as well as early payments on invoices or services rendered in advance.

Revenue Breakdown

Now, let's check Danaos revenue. Based on the latest financial disclosure, Danaos reported 689.5 M of revenue. This is 80.29% lower than that of the Marine sector and significantly higher than that of the Industrials industry. The revenue for all United States stocks is 92.69% higher than that of Danaos. As for Alkermes Plc we see revenue of 1.17 B, which is much higher than that of the Industrials

Danaos689.5 Million
Alkermes1.17 Billion
689.5 M
1.2 B

Our take on Danaos small dip

The semi variance is down to 4.76 as of today. Danaos currently demonstrates below-average downside deviation. It has Information Ratio of -0.01 and Jensen Alpha of -0.03. However, we advise investors to further question Danaos expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Danaos' stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Danaos' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Although some other companies in the marine shipping industry are either recovering or due for a correction, Danaos may not be performing as strong as the other in terms of long-term growth potentials. To conclude, as of the 13th of February 2023, we see that Danaos responds to the market. The firm is undervalued with below average probability of distress within the next 24 months. Our final 90 days 'Buy-Sell' recommendation on the firm is Strong Hold.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Danaos. Please refer to our Terms of Use for any information regarding our disclosure principles.

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