Star Bulk Carriers Corp. (NASDAQ: SBLK) and Danaos Corporation (NYSE:DAC) are both small-cap transportation companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Institutional & Insider Ownership

75.0% of Star Bulk Carriers Corp. 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 large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Star Bulk Carriers Corp. and Danaos Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Star Bulk Carriers Corp. $266.62 million 2.72 $59.97 million ($1.86) -6.17
Danaos Corporation $447.83 million 0.37 $281.14 million ($3.80) -0.39

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

Profitability

This table compares Star Bulk Carriers Corp. and Danaos Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Star Bulk Carriers Corp. -36.90% -5.54% -2.83%
Danaos Corporation -92.96% 16.72% 3.09%

Volatility and Risk

Star Bulk Carriers Corp. has a beta of 2.92, meaning that its share price is 192% more volatile than the S&P 500. Comparatively, Danaos Corporation has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Star Bulk Carriers Corp. and Danaos Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Star Bulk Carriers Corp. 0 1 6 0 2.86
Danaos Corporation 0 2 0 0 2.00

Star Bulk Carriers Corp. presently has a consensus price target of $12.80, suggesting a potential upside of 11.60%. Danaos Corporation has a consensus price target of $3.00, suggesting a potential upside of 100.00%. Given Danaos Corporation’s higher possible upside, analysts clearly believe Danaos Corporation is more favorable than Star Bulk Carriers Corp..

Summary

Star Bulk Carriers Corp. beats Danaos Corporation on 7 of the 12 factors compared between the two stocks.

Star Bulk Carriers Corp. Company Profile

Star Bulk Carriers Corp. is an international shipping company. The Company owns and operates a fleet of dry bulk carrier vessels. As of December 31, 2016, the Company’s fleet included 73 vessels consisting primarily of Newcastlemax and Capesize, as well as Kamsarmax, Ultramax and Supramax vessels with a carrying capacity between 52,055 and 209,537 deadweight tonnage (dwt). The Company’s vessels transport a range of bulk commodities, including ores, coal, grains and fertilizers, along shipping routes across the world. The Company’s fleet, which emphasizes Capesize vessels, primarily transports minerals from the Americas and Australia to East Asia, particularly China, as well as Japan, South Korea, Taiwan, Indonesia and Malaysia. The Company’s Supramax vessels carry minerals, grain products and steel between the Americas, Europe, Africa, Australia and Indonesia, and from these areas to China, Japan, South Korea, Taiwan, the Philippines and Malaysia.

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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