Critical Analysis: Flex LNG (NYSE:FLNG) versus Safe Bulkers (NYSE:SB)

Safe Bulkers (NYSE:SB) and Flex LNG (NYSE:FLNG) 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, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.

Volatility & Risk

Safe Bulkers has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Flex LNG has a beta of 0.34, meaning that its share price is 66% less volatile than the S&P 500.

Institutional and Insider Ownership

21.7% of Safe Bulkers shares are owned by institutional investors. 40.3% of Safe Bulkers shares are owned by company insiders. Comparatively, 0.3% of Flex LNG shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Safe Bulkers and Flex LNG”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Safe Bulkers	$307.63 million	1.78	$97.38 million	$0.36	14.90
Flex LNG	$356.35 million	4.00	$117.68 million	$1.83	14.44

Flex LNG has higher revenue and earnings than Safe Bulkers. Flex LNG is trading at a lower price-to-earnings ratio than Safe Bulkers, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Safe Bulkers and Flex LNG, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Safe Bulkers	0	2	2	0	2.50
Flex LNG	0	3	0	0	2.00

Safe Bulkers presently has a consensus target price of $4.80, suggesting a potential downside of 10.53%. Flex LNG has a consensus target price of $23.00, suggesting a potential downside of 12.97%. Given Safe Bulkers’ stronger consensus rating and higher probable upside, research analysts clearly believe Safe Bulkers is more favorable than Flex LNG.

Profitability

This table compares Safe Bulkers and Flex LNG’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Safe Bulkers	16.78%	5.18%	3.07%
Flex LNG	28.06%	14.04%	4.09%

Dividends

Safe Bulkers pays an annual dividend of $0.20 per share and has a dividend yield of 3.7%. Flex LNG pays an annual dividend of $3.00 per share and has a dividend yield of 11.4%. Safe Bulkers pays out 55.6% of its earnings in the form of a dividend. Flex LNG pays out 163.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

About Safe Bulkers

Safe Bulkers, Inc., together with its subsidiaries, provides marine drybulk transportation services. It owns and operates drybulk vessels for transporting bulk cargoes primarily coal, grain, and iron ore. The company has a fleet of 47 drybulk vessels having an aggregate carrying capacity of 4,719,600 deadweight tons. Its fleet consists of 10 Panamax class vessels, 11 Kamsarmax class vessels, 18 post-Panamax class vessels, and 8 Capesize class vessels. Safe Bulkers, Inc. was incorporated in 2007 and is based in Monaco.

About Flex LNG

FLEX LNG Ltd. engages in the seaborne transportation of liquefied natural gas (LPG) through the ownership and operation of LNG carriers. The company was founded by Philip Eystein Fjeld, Trym Tveitnes and Jostein Ueland in September 2006 and is headquartered in Hamilton, Bermuda.