Baltic Trading (NYSE: BALT) and Danaos (NYSE:DAC) are both small-cap industrials companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.

Profitability

This table compares Baltic Trading and Danaos’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Baltic Trading -613.08% -49.39% -30.66%
Danaos -85.72% 21.68% 3.50%

Valuation & Earnings

This table compares Baltic Trading and Danaos’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Baltic Trading N/A N/A N/A ($1.14) -1.37
Danaos $498.33 million 0.35 -$366.19 million ($3.52) -0.45

Baltic Trading has higher earnings, but lower revenue than Danaos. Baltic Trading is trading at a lower price-to-earnings ratio than Danaos, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Baltic Trading and Danaos, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Baltic Trading 0 0 0 0 N/A
Danaos 0 2 0 0 2.00

Danaos has a consensus target price of $3.00, indicating a potential upside of 87.50%. Given Danaos’ higher possible upside, analysts clearly believe Danaos is more favorable than Baltic Trading.

Volatility & Risk

Baltic Trading has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, Danaos has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Insider & Institutional Ownership

2.0% of Danaos shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Danaos beats Baltic Trading on 7 of the 9 factors compared between the two stocks.

Baltic Trading Company Profile

Baltic Trading Limited is a shipping business focused on the drybulk industry spot market. The Company’s fleet consists of four Capesize vessels, two Ultramax vessels, four Supramax vessels and five Handysize vessels with an aggregate carrying capacity of approximately 1,221,000 deadweight tons. Its fleet contains six groups of sister ships, which are vessels of virtually identical sizes and specifications. It operates a fleet of drybulk ships that transport iron ore, coal, grain, steel products and other drybulk cargoes along shipping routes around the world. It operates its vessels on spot market-related time charters, short-term time charters or in vessel pools trading in the spot market. Genco Shipping & Trading Limited (Genco) serves as the Company’s manager. Genco provides it with commercial and strategic management of its fleet.

Danaos Company Profile

Danaos Corporation is a holding company and an international owner of containerships, chartering its vessels to a range of liner companies. The Company’s principal business is the acquisition and operation of vessels. The Company conducts its operations through the vessel owning companies, whose principal activity is the ownership and operation of containerships that are under the management of a related party of the company. The Company’s manager is Danaos Shipping Company Limited (Danaos Shipping). The Company has a fleet of over 50 containerships aggregating approximately 329,590 twenty-foot equivalent units (TEUs). Its containership fleet includes approximately 53 containerships deployed on time charters and approximately two containerships deployed on bareboat charter. Gemini Shipholdings Corporation (Gemini), a company beneficially owned by the Company, owns approximately four additional containerships of over 24,000 TEU aggregate capacity.

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