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NEW YORK (TheStreet) -- Danaos (DAC) - Get Danaos Corporation Report has been downgraded by TheStreet Ratings from Hold to Sell with a ratings score of D.  TheStreet Ratings Team has this to say about their recommendation:

"We rate DANAOS CORP (DAC) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

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  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Marine industry. The net income has significantly decreased by 1112.8% when compared to the same quarter one year ago, falling from -$4.24 million to -$51.38 million.
  • The debt-to-equity ratio is very high at 4.38 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.21, which clearly demonstrates the inability to cover short-term cash needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Marine industry and the overall market on the basis of return on equity, DANAOS CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The share price of DANAOS CORP has not done very well: it is down 19.56% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • DANAOS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past year. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, DANAOS CORP swung to a loss, reporting -$0.04 versus $0.34 in the prior year. This year, the market expects an improvement in earnings ($1.06 versus -$0.04).
  • You can view the full analysis from the report here: DAC Ratings Report