Safe Bulkers (NYSE: SB) and Danaos Corporation (NYSE:DAC) are both small-cap transportation companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, earnings and valuation.

Analyst Recommendations

This is a summary of recent ratings and price targets for Safe Bulkers and Danaos Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Safe Bulkers 0 4 2 0 2.33
Danaos Corporation 0 2 0 0 2.00

Safe Bulkers currently has a consensus price target of $2.58, indicating a potential downside of 0.26%. Danaos Corporation has a consensus price target of $3.00, indicating a potential upside of 87.50%. Given Danaos Corporation’s higher possible upside, analysts plainly believe Danaos Corporation is more favorable than Safe Bulkers.

Insider and Institutional Ownership

14.8% of Safe Bulkers shares are held by institutional investors. Comparatively, 2.2% of Danaos Corporation shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Safe Bulkers and Danaos Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Safe Bulkers $127.17 million 2.06 $59.75 million ($0.57) -4.54
Danaos Corporation $447.83 million 0.39 $281.14 million ($3.80) -0.42

Danaos Corporation has higher revenue and earnings than Safe Bulkers. Safe Bulkers is trading at a lower price-to-earnings ratio than Danaos Corporation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Safe Bulkers has a beta of 2.4, indicating that its share price is 140% more volatile than the S&P 500. Comparatively, Danaos Corporation has a beta of 1.29, indicating that its share price is 29% more volatile than the S&P 500.

Profitability

This table compares Safe Bulkers and Danaos Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Safe Bulkers -26.74% -3.34% -1.61%
Danaos Corporation -92.96% 16.72% 3.09%

Summary

Safe Bulkers beats Danaos Corporation on 7 of the 12 factors compared between the two stocks.

About Safe Bulkers

Safe Bulkers, Inc. is a holding company. The Company’s principal business is the acquisition, ownership and operation of drybulk vessels. The Company’s vessels operate across the world, carrying drybulk cargo for the consumers of marine drybulk transportation services. The Company is an international provider of marine drybulk transportation services, transporting bulk cargoes, particularly coal, grain and iron ore, along shipping routes across the world. As of February 17, 2017 the Company’s fleet included 38 vessels, of which 14 are Panamax class vessels, nine are Kamsarmax class vessels, 12 are Post-Panamax class vessels and three are Capesize class vessels, with an aggregate carrying capacity of 3,421,800 deadweight tonnage (dwt). The Company’s fleet of Post-Panamax vessels includes Marina, Xenia, Sophia, Eleni, Martine, Andreas K, Panayiota K, Venus Heritage, Venus History, Venus Horizon and Troodos Sun. Its fleet of Capesize vessels includes Kanaris, Pelopidas and Lake Despina.

About Danaos Corporation

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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