Danaos Corporation DAC is scheduled to release second-quarter 2021 results on Aug 2, after market close.

The shipping company has a pleasant surprise record as its earnings beat the Zacks Consensus Estimate in three of the last four quarters (missing the mark in the other one), the average being 5.6%.

Danaos Corporation Price and EPS Surprise

Danaos Corporation price-eps-surprise | Danaos Corporation Quote

The Zacks Consensus Estimate for second-quarter earnings has been revised 3.8% downward over the past 60 days.

Against this backdrop, let’s examine the factors that are likely to have impacted the company’s June-quarter performance.

We expect Danaos’ second-quarter bottom-line performance to have been hurt by higher vessel operating expenses, mainly due to the increase in the average number of vessels in its fleet. High fuel costs are also likely to have flared up total expenses.

However, with the gradual resumption of economic activities, the world trade gathered pace, which should aid the second-quarter results of shipping stocks like Danaos. This is because the shipping industry is responsible for transporting a high proportion of goods involved in world trade.

Bullishness surrounding the containership market is a huge positive for Danaos and is likely to have boosted its top line in the soon-to-be-reported quarter. The containership market is being aided by increased manufacturing activities in Asia besides other factors. The already high container rates were further hiked by the Suez Canal crisis earlier this year. These steep rates are likely to have aided the company’s performance in the June quarter as container capacity tightened.

Earnings Whispers

Our proven model does not predict an earnings beat for Danaos this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. However, that is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Danaos has an Earnings ESP of 0.00% as the Most Accurate Estimate is in line with the Zacks Consensus Estimate of $3.26. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Danaos sports a Zacks Rank of 1, currently.

Highlights of Q1 Earnings

Danaos’first-quarter earnings (excluding $11.84 from non-recurring items) of $2.63 per share fell short of the Zacks Consensus Estimate by 4 cents. Total revenues of $132.1 million increased 24.4% year over year and also surpassed the Zacks Consensus Estimate of $129.1 million.

Stocks to Consider

Investors interested in the broader Transportation sector may consider Genco Shipping & Trading Limited GNK, Eagle Bulk Shipping EGLE and Mesa Air Group MESA as these stocks possess the right combination of elements to beat on earnings this reporting cycle.

Genco Shipping has an Earnings ESP of +11.81% and is Zacks #1 Ranked, presently. The company will release second-quarter 2021 results on Aug 4.

Eagle Bulk Shipping has an Earnings ESP of +5.98% and a Zacks Rank #3 at present. The company will release second-quarter 2021 results on Aug 5.

Mesa has an Earnings ESP of +15.56% and is currently a #3 Ranked player. The company will release third-quarter fiscal 2021 results on Aug 9.

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Genco Shipping & Trading Limited (GNK) : Free Stock Analysis Report

Eagle Bulk Shipping Inc. (EGLE) : Free Stock Analysis Report

Danaos Corporation (DAC) : Free Stock Analysis Report

Mesa Air Group, Inc. (MESA) : Free Stock Analysis Report

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