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

Analyst Ratings

This is a breakdown of recent ratings for Danaos Corporation and DryShips, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Danaos Corporation 0 2 0 0 2.00
DryShips 0 0 0 0 N/A

Danaos Corporation presently has a consensus price target of $3.00, indicating a potential upside of 76.47%. Given Danaos Corporation’s higher probable upside, research analysts plainly believe Danaos Corporation is more favorable than DryShips.

Institutional & Insider Ownership

1.9% of Danaos Corporation shares are owned by institutional investors. Comparatively, 1.2% of DryShips shares are owned 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.

Risk and Volatility

Danaos Corporation has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500. Comparatively, DryShips has a beta of 2.18, suggesting that its share price is 118% more volatile than the S&P 500.

Dividends

DryShips pays an annual dividend of $0.10 per share and has a dividend yield of 2.4%. Danaos Corporation does not pay a dividend. DryShips pays out 0.0% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
Danaos Corporation -85.72% 21.68% 3.50%
DryShips -218.76% -49.79% -27.33%

Valuation & Earnings

This table compares Danaos Corporation and DryShips’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Danaos Corporation $498.33 million 0.37 -$366.19 million ($3.52) -0.48
DryShips $51.93 million 8.23 -$198.68 million ($113,582.83) 0.00

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

Summary

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

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.

DryShips Company Profile

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.

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