Danaos (NYSE: DAC) and Ship Finance International (NYSE:SFL) are both small-cap transportation companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.
Institutional and Insider Ownership
1.9% of Danaos shares are owned by institutional investors. Comparatively, 23.7% of Ship Finance International shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This table compares Danaos and Ship Finance International’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Ship Finance International||24.87%||9.27%||3.48%|
Ship Finance International pays an annual dividend of $1.40 per share and has a dividend yield of 9.5%. Danaos does not pay a dividend. Ship Finance International pays out 117.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ship Finance International has raised its dividend for 6 consecutive years.
Risk and Volatility
Danaos has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Ship Finance International has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500.
Earnings & Valuation
This table compares Danaos and Ship Finance International’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Danaos||$451.73 million||0.41||$83.90 million||$1.05||1.62|
|Ship Finance International||$380.88 million||4.75||$101.20 million||$1.19||12.39|
Ship Finance International has lower revenue, but higher earnings than Danaos. Danaos is trading at a lower price-to-earnings ratio than Ship Finance International, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and recommmendations for Danaos and Ship Finance International, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Ship Finance International||1||2||2||0||2.20|
Danaos currently has a consensus price target of $2.00, suggesting a potential upside of 17.65%. Ship Finance International has a consensus price target of $15.83, suggesting a potential upside of 7.34%. Given Danaos’ higher probable upside, equities research analysts clearly believe Danaos is more favorable than Ship Finance International.
Ship Finance International beats Danaos on 11 of the 16 factors compared between the two stocks.
Danaos Corporation, together with its subsidiaries, owns and operates containerships in Australia, Asia, Europe, and the United States. The company offers seaborne transportation services, such as chartering its vessels to liner companies. As of February 28, 2018, it had a fleet of 55 containerships aggregating 327,616 twenty foot equivalent units. The company was formerly known as Danaos Holdings Limited and changed its name to Danaos Corporation in October 2005. Danaos Corporation was founded in 1972 and is based in Piraeus, Greece.
About Ship Finance International
Ship Finance International Limited owns and operates vessels and offshore related assets primarily in Bermuda, Cyprus, Malta, Liberia, Norway, the United Kingdom, and the Marshall Islands. It is also involved in the charter, purchase, and sale of assets. In addition, the company operates in various sectors of the shipping and offshore industry, including oil transportation, dry bulk shipments, chemical transportation, oil product transportation, container transportation, car transportation, drilling rigs, and offshore supply vessels. As of March 26, 2018, it had a fleet of 10 crude oil tankers, 22 dry bulk carriers, 22 container vessels, 2 car carriers, 2 jack-up drilling rigs, 2 ultra-deepwater drilling units, 5 offshore supply vessels, 2 chemical tankers, and 2 oil product tankers. The company was founded in 2003 and is based in Hamilton, Bermuda.
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