Critical Comparison: Golden Ocean Group Limited (GOGL) and Scorpio Bulkers (SALT)

Golden Ocean Group Limited (NASDAQ: GOGL) and Scorpio Bulkers (NYSE:SALT) are both small-cap transportation companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, earnings, analyst recommendations, valuation and risk.

Earnings and Valuation

This table compares Golden Ocean Group Limited and Scorpio Bulkers’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Golden Ocean Group Limited $257.81 million 4.28 -$127.71 million ($0.46) -17.13
Scorpio Bulkers $78.40 million 7.12 -$124.83 million ($1.11) -6.67

Scorpio Bulkers has higher revenue, but lower earnings than Golden Ocean Group Limited. Golden Ocean Group Limited is trading at a lower price-to-earnings ratio than Scorpio Bulkers, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Golden Ocean Group Limited and Scorpio Bulkers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Golden Ocean Group Limited -14.69% -3.91% -2.02%
Scorpio Bulkers -57.43% -6.51% -3.97%

Risk and Volatility

Golden Ocean Group Limited has a beta of 2.37, indicating that its stock price is 137% more volatile than the S&P 500. Comparatively, Scorpio Bulkers has a beta of 3.65, indicating that its stock price is 265% more volatile than the S&P 500.

Institutional and Insider Ownership

9.9% of Golden Ocean Group Limited shares are held by institutional investors. Comparatively, 44.2% of Scorpio Bulkers 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.

Analyst Recommendations

This is a summary of recent recommendations for Golden Ocean Group Limited and Scorpio Bulkers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Golden Ocean Group Limited 0 1 6 0 2.86
Scorpio Bulkers 0 2 4 0 2.67

Golden Ocean Group Limited presently has a consensus target price of $11.33, indicating a potential upside of 43.82%. Scorpio Bulkers has a consensus target price of $9.71, indicating a potential upside of 31.19%. Given Golden Ocean Group Limited’s stronger consensus rating and higher possible upside, research analysts clearly believe Golden Ocean Group Limited is more favorable than Scorpio Bulkers.

Summary

Golden Ocean Group Limited beats Scorpio Bulkers on 8 of the 12 factors compared between the two stocks.

About Golden Ocean Group Limited

Golden Ocean Group Limited, formerly Knightsbridge Shipping Limited, is an international dry bulk shipping company. The Company is engaged in the transportation of dry bulk cargoes. It owns and operates a fleet of dry bulk carrier vessels, focusing on the Capesize, Panamax and Supramax markets. Its vessels transport a range of major and minor bulk commodities, including ores, coal, grains and fertilizers. Its fleet includes owned vessels, bareboat vessels, chartered vessels, commercial management vessels and newbuildings. It owns over 40 dry bulk carriers and has contracts for over 20 newbuildings. It also has over 10 vessels chartered-in (of which over eight are chartered in from Ship Finance and over five are chartered in from third parties) and over one vessel chartered-in through a joint venture. Approximately six of the vessels are chartered-out on fixed rate time charters and the other operates in the spot market or fixed on index-linked time charter contracts.

About Scorpio Bulkers

Scorpio Bulkers Inc. is a shipping company. The Company owns and operates newbuilding drybulk carriers with fuel-efficient specifications and carrying capacities of greater than 30,000 deadweight tons (dwt). The Company operates through two segments: Kamsarmax and Ultramax. Its Kamsarmax segment includes vessels ranging from approximately 77,500 DWT to 98,700 DWT. Its Ultramax segment includes vessels ranging from approximately 60,200 DWT to 64,000 DWT. All of its owned vessels have carrying capacities of greater than 60,000 dwt. Its vessels transport a range of bulk commodities, including ores, coal, grains and fertilizers, along shipping routes, and are employed primarily in the spot market or in spot market-oriented pools of similarly sized vessels. As of December 31, 2016, its operating fleet of 48 vessels consisted of 47 drybulk vessels and one chartered-in drybulk vessel. It also has a contract for the construction of one newbuilding drybulk vessel.

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