DryShips (NASDAQ: DRYS) and Seaspan Corporation (NYSE:SSW) are both small-cap transportation companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for DryShips and Seaspan Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DryShips 0 0 0 0 N/A
Seaspan Corporation 3 6 0 0 1.67

Seaspan Corporation has a consensus price target of $6.79, suggesting a potential upside of 2.81%. Given Seaspan Corporation’s higher possible upside, analysts plainly believe Seaspan Corporation is more favorable than DryShips.

Profitability

This table compares DryShips and Seaspan Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DryShips -219.71% -96.36% -36.23%
Seaspan Corporation -13.54% 7.51% 2.36%

Institutional & Insider Ownership

6.4% of DryShips shares are held by institutional investors. Comparatively, 12.6% of Seaspan Corporation shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares DryShips and Seaspan Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DryShips $46.72 million 0.02 -$36.42 million ($273,305.91) 0.00
Seaspan Corporation $844.00 million 0.92 $501.00 million ($1.67) -3.95

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

Risk and Volatility

DryShips has a beta of 2.28, meaning that its share price is 128% more volatile than the S&P 500. Comparatively, Seaspan Corporation has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Dividends

DryShips pays an annual dividend of $0.28 per share and has a dividend yield of 7.9%. Seaspan Corporation pays an annual dividend of $0.50 per share and has a dividend yield of 7.6%. DryShips pays out 0.0% of its earnings in the form of a dividend. Seaspan Corporation pays out -29.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Seaspan Corporation has increased its dividend for 5 consecutive years.

Summary

Seaspan Corporation beats DryShips on 11 of the 13 factors compared between the two stocks.

About DryShips

DryShips, Inc. is a holding company. The Company owns drybulk carriers and offshore support vessels. The Company operates through two segments: the drybulk carrier and the offshore support. Under its drybulk segment, the Company operates as a provider of drybulk commodities transportation services for the steel, electric utility, construction and agri-food industries. Under its offshore support segment, the Company operates as a provider of offshore support services to the global offshore energy industry. The Offshore support segment operates a diversified fleet of offshore support vessels. It owns a fleet of approximately 20 Panamax drybulk carriers, which have a combined deadweight tonnage (dwt) of approximately 1.5 million dwt and an average age of approximately 10 years, and six offshore supply vessels, comprising over two platform supply and four oil spill recovery vessels, and have an average age of approximately 3.1 years.

About Seaspan Corporation

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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