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

Analyst Recommendations

This is a summary of current recommendations 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 3 0 2.43
Danaos Corporation 0 2 0 0 2.00

Safe Bulkers currently has a consensus price target of $3.19, indicating a potential downside of 10.71%. Danaos Corporation has a consensus price target of $3.00, indicating a potential upside of 100.00%. Given Danaos Corporation’s higher probable upside, analysts plainly believe Danaos Corporation is more favorable than Safe Bulkers.

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%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Safe Bulkers $127.17 million 2.85 $59.75 million ($0.57) -6.26
Danaos Corporation $447.83 million 0.37 $281.14 million ($3.80) -0.39

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.

Institutional and Insider Ownership

19.0% of Safe Bulkers shares are held by institutional investors. Comparatively, 1.9% of Danaos Corporation shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Safe Bulkers has a beta of 2.34, suggesting that its stock price is 134% more volatile than the S&P 500. Comparatively, Danaos Corporation has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500.

Summary

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

Safe Bulkers Company Profile

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.

Danaos Corporation 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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