Contrasting Safe Bulkers (NYSE:SB) and Danaos (NYSE:DAC)

Safe Bulkers (NYSE:SB) and Danaos (NYSE:DAC) are both industrials companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, dividends, institutional ownership, risk, earnings, profitability and analyst recommendations.

Dividends

Safe Bulkers pays an annual dividend of $0.30 per share and has a dividend yield of 4.1%. Danaos pays an annual dividend of $4.00 per share and has a dividend yield of 2.6%. Safe Bulkers pays out 38.5% of its earnings in the form of a dividend. Danaos pays out 13.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Danaos has increased its dividend for 3 consecutive years.

Earnings and Valuation

This table compares Safe Bulkers and Danaos”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Safe Bulkers	$275.74 million	2.72	$38.56 million	$0.78	9.44
Danaos	$1.06 billion	2.63	$494.61 million	$29.55	5.17

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

Profitability

This table compares Safe Bulkers and Danaos’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Safe Bulkers	28.29%	9.63%	5.77%
Danaos	51.26%	13.20%	10.08%

Risk and Volatility

Safe Bulkers has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500. Comparatively, Danaos has a beta of 0.94, indicating that its share price is 6% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Safe Bulkers and Danaos, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Safe Bulkers	0	1	1	0	2.50
Danaos	0	0	0	3	4.00

Safe Bulkers currently has a consensus price target of $6.00, suggesting a potential downside of 18.53%. Given Safe Bulkers’ higher probable upside, analysts plainly believe Safe Bulkers is more favorable than Danaos.

Institutional and Insider Ownership

21.7% of Safe Bulkers shares are held by institutional investors. Comparatively, 19.0% of Danaos shares are held by institutional investors. 40.3% of Safe Bulkers shares are held by insiders. Comparatively, 41.0% of Danaos shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Danaos beats Safe Bulkers on 11 of the 18 factors compared between the two stocks.

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 Danaos

Danaos Corporation, together with its subsidiaries, provides container and drybulk vessels services in Australia, Asia, and Europe. The company offers seaborne transportation services by operating vessels in the containership and drybulk sectors of the shipping industry. As of April 03, 2024, it had a fleet of 68 containerships aggregating 421,293 twenty-foot equivalent units in capacity. The company was formerly known as Danaos Holdings Limited and changed its name to Danaos Corporation in October 2005. Danaos Corporation was founded in 1963 and is based in Piraeus, Greece.