Analyzing DryShips (DRYS) and Danaos Corporation (DAC)

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

Profitability

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

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

Analyst Recommendations

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

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

Danaos Corporation has a consensus target price of $3.00, suggesting a potential upside of 81.82%. Given Danaos Corporation’s higher possible upside, analysts clearly believe Danaos Corporation is more favorable than DryShips.

Risk & Volatility

DryShips has a beta of 2.16, indicating that its stock price is 116% more volatile than the S&P 500. Comparatively, Danaos Corporation has a beta of 1.33, indicating that its stock price is 33% more volatile than the S&P 500.

Institutional and Insider Ownership

1.3% of DryShips 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 hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

DryShips pays an annual dividend of $0.10 per share and has a dividend yield of 2.7%. Danaos Corporation does not pay a dividend. DryShips pays out 0.0% of its earnings in the form of a dividend.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
DryShips $51.93 million 7.55 -$198.68 million ($103,249.10) 0.00
Danaos Corporation $498.33 million 0.36 -$366.19 million ($3.52) -0.47

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.

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.

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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