Although supply chain constraints may continue to spook investors, President Biden’s deal with ports in Los Angeles and Long Beach to remain operative 24 hours a day to help alleviate a shipping bottleneck could buoy investors’ optimism about the industry’s prospects. Morgan Stanley expects shipping revenues to stay elevated at least through the second quarter of 2022.
Furthermore, record freight rates resulting from increased post-pandemic global demand for manufactured products are aiding shipping companies in boosting their profit margins. Annual container fleet growth is expected to increase 4.5% in 2022 and 7.5% in 2023. Also, U.S. container imports are anticipated to grow by 2 – 3% in 2022.
Given this backdrop, we think fundamentally strong shipping and container stocks A.P. Møller – Mærsk A/S (AMKBY), Matson, Inc. (MATX), and Danaos Corporation (DAC) could be great additions to one’s watchlist.
A.P. Møller – Mærsk A/S (AMKBY)
Based in Copenhagen, Denmark, AMKBY is a globally integrated container logistics company in 130 countries. Ocean; Logistics & Services; Terminals & Towage; and Manufacturing & Others are the segments through which the company operates. AMKBY offers Transportation services, Digital Solutions, Supply Chain and Logistics, and Financial Services.
Last month, AMKBY expanded its contract logistic capabilities by acquiring LF Logistics Holdings Limited, the omnichannel fulfillment contract logistics company in Asia-Pacific. The company believes that the acquisition should strengthen AMKBY’s logistics and services offerings to its customers within “Fulfilled by Maersk” and create a strong value proposition for customers.
AMKBY’s revenue increased 67.5% year-over-year to $16.61 billion in the third quarter, ended Sept. 16, 2021. The company’s EBITDA grew 189.2% from its year-ago value to $6.94 billion. Its profit rose 354.5% from the prior-year quarter to $5.86 billion.
Analysts expect AMKBY’s revenue for its fiscal period ending March 2022 to be $17.29 billion, representing 39% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Its stock price has increased 59.9% over the past year.
AMKBY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Momentum and Growth. We have also graded AMKBY for Sentiment, Value, Quality, and Stability. Click here to access all AMKBY’s ratings. AMKBY is ranked #1 of 47 stocks in the Shipping industry.
Matson, Inc. (MATX)
MATX in Honolulu, Hawaii, provides ocean transportation and logistics services. The company offers domestic and international rail intermodal service, long haul and regional highway brokerage, supply chain services, and less-than-truck-load (LTL) transportation services. In addition, it has third-party logistics services that include distribution, less-than-container-load (LCL) consolidation, and international freight forwarding.
During the third quarter, ended Sept. 30, 2021, MATX’s total operating revenue increased 66.1% to $1.07 billion. The company’s operating income grew 284% from its year-ago value to $377.9 million. Its net income rose 299.4% from its year-ago value to $283.2 million. Also, the company’s EPS increased 300.6% year-over-year to $6.53.
MATX’s consensus revenue is expected to increase 21.9% year-over-year to $867.49 million in its fiscal period ending March 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Furthermore, its EPS is expected to increase 295.3% in fiscal 2021. Over the past six months, the stock has soared 36.2% in price.
MATX’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Momentum and a B grade for Value and Growth.
Danaos Corporation (DAC)
Based in Piraeus, Greece, DAC is an international owner of containerships, chartering its vessels to a range of liner companies. As of Feb. 28, 2021, it had a fleet of 65 containerships aggregating 403,793 twenty-foot equivalent units in capacity. DAC is managed by Danaos Shipping Company Limited (Danaos Shipping).
DAC’s operating revenues increased 64.7% year-over-year to $195.92 million. The company’s net income grew 407.7% from its year-ago value to $217.23 million. Its EPS rose 509.8% from its year-ago value to $10.55. Also, the company’s adjusted EBITDA increased 79.6% year-over-year to $149.62 million.
For its fiscal 2022, DAC’s revenue is expected to be $846.15 million, representing a 27.4% year-over-year increase. The company has surpassed the consensus EPS in three of the trailing four quarters. Its EPS is expected to increase 101.9% in fiscal 2021 and 54.6% next year. The stock has surged 156.1% in price over the past year.
It is no surprise that DAC has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Momentum and a B grade for Growth.
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AMKBY shares were trading at $17.65 per share on Monday afternoon, down $0.75 (-4.08%). Year-to-date, AMKBY has declined -1.52%, versus a -2.64% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research. More...
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