Golden Ocean Group Limited (NASDAQ: GOGL) and Seaspan Corporation (NYSE:SSW) are both small-cap deep sea freight companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Dividends

Seaspan Corporation pays an annual dividend of $0.50 per share and has a dividend yield of 8.5%. Golden Ocean Group Limited does not pay a dividend. Seaspan Corporation pays out 108.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Seaspan Corporation has raised its dividend for 5 consecutive years.

Insider & Institutional Ownership

9.8% of Golden Ocean Group Limited shares are owned by institutional investors. Comparatively, 15.2% of Seaspan Corporation shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Golden Ocean Group Limited and Seaspan Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Golden Ocean Group Limited 0 1 6 0 2.86
Seaspan Corporation 3 5 0 0 1.63

Golden Ocean Group Limited currently has a consensus target price of $11.33, indicating a potential upside of 54.62%. Seaspan Corporation has a consensus target price of $6.79, indicating a potential upside of 15.01%. Given Golden Ocean Group Limited’s stronger consensus rating and higher possible upside, equities analysts plainly believe Golden Ocean Group Limited is more favorable than Seaspan Corporation.

Profitability

This table compares Golden Ocean Group Limited and Seaspan Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Golden Ocean Group Limited -14.69% -3.91% -2.02%
Seaspan Corporation 14.23% 7.14% 2.28%

Valuation and Earnings

This table compares Golden Ocean Group Limited and Seaspan Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Golden Ocean Group Limited $257.81 million 3.98 -$127.71 million ($0.40) -18.33
Seaspan Corporation $877.91 million 0.83 -$139.03 million $0.46 12.83

Golden Ocean Group Limited has higher revenue, but lower earnings than Seaspan Corporation. Golden Ocean Group Limited is trading at a lower price-to-earnings ratio than Seaspan Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Golden Ocean Group Limited has a beta of 2.35, indicating that its share price is 135% more volatile than the S&P 500. Comparatively, Seaspan Corporation has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500.

Summary

Seaspan Corporation beats Golden Ocean Group Limited on 8 of the 15 factors compared between the two stocks.

Golden Ocean Group Limited Company Profile

Golden Ocean Group Limited, formerly Knightsbridge Shipping Limited, is an international dry bulk shipping company. The Company is engaged in the transportation of dry bulk cargoes. It owns and operates a fleet of dry bulk carrier vessels, focusing on the Capesize, Panamax and Supramax markets. Its vessels transport a range of major and minor bulk commodities, including ores, coal, grains and fertilizers. Its fleet includes owned vessels, bareboat vessels, chartered vessels, commercial management vessels and newbuildings. It owns over 40 dry bulk carriers and has contracts for over 20 newbuildings. It also has over 10 vessels chartered-in (of which over eight are chartered in from Ship Finance and over five are chartered in from third parties) and over one vessel chartered-in through a joint venture. Approximately six of the vessels are chartered-out on fixed rate time charters and the other operates in the spot market or fixed on index-linked time charter contracts.

Seaspan Corporation Company Profile

Seaspan Corporation is an independent charter owner and manager of containerships. The Company charters pursuant to long-term, fixed-rate time charters with various container liner companies. As of February 20, 2017, it had operated a fleet of 88 containerships and had entered into contracts for the purchase of an additional eight new building containerships. Its operating vessels include YM Wish, YM Wellhead, YM Witness, COSCO Glory, COSCO Development, COSCO Harmony, COSCO Excellence, COSCO Hope, COSCO Fortune, Seaspan Yangtze, CSCL Zeebrugge, CSCL Long Beach, CSCL Oceania, COSCO Vietnam, MOL Emissary, Seaspan Chiwan, Seaspan Ningbo, Seaspan Felixstowe, CSCL Brisbane, Seaspan Santos, Seaspan Loncomilla, Seaspan Lingue, CSCL Montevideo, CSCL Callao, Guayaquil Bridge and Calicanto Bridge. The Company is engaged in the operation and management of vessel, including maintaining the vessel, periodic dry-docking, cleaning and painting and performing work required by regulations.

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