Financial Review: Scorpio Bulkers (SALT) and Seaspan Corporation (SSW)

Scorpio Bulkers (NYSE: SALT) and Seaspan Corporation (NYSE:SSW) 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, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Earnings and Valuation

This table compares Scorpio Bulkers and Seaspan Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Scorpio Bulkers $123.25 million 4.43 $610,000.00 ($1.26) -6.03
Seaspan Corporation $844.00 million 1.01 $501.00 million ($1.67) -4.32

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

Risk and Volatility

Scorpio Bulkers has a beta of 3.65, indicating that its stock price is 265% more volatile than the S&P 500. Comparatively, Seaspan Corporation has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500.

Profitability

This table compares Scorpio Bulkers and Seaspan Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Scorpio Bulkers -72.87% -7.52% -4.58%
Seaspan Corporation -13.54% 7.51% 2.36%

Dividends

Seaspan Corporation pays an annual dividend of $0.50 per share and has a dividend yield of 6.9%. Scorpio Bulkers does not pay a dividend. Seaspan Corporation pays out -29.9% of its earnings in the form of a dividend. Scorpio Bulkers has increased its dividend for 5 consecutive years.

Insider & Institutional Ownership

44.0% of Scorpio Bulkers shares are held by institutional investors. Comparatively, 15.3% of Seaspan Corporation shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for Scorpio Bulkers and Seaspan Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Scorpio Bulkers 0 2 4 0 2.67
Seaspan Corporation 3 6 0 0 1.67

Scorpio Bulkers presently has a consensus target price of $9.54, suggesting a potential upside of 25.55%. Seaspan Corporation has a consensus target price of $6.79, suggesting a potential downside of 6.02%. Given Scorpio Bulkers’ stronger consensus rating and higher probable upside, research analysts plainly believe Scorpio Bulkers is more favorable than Seaspan Corporation.

Summary

Scorpio Bulkers beats Seaspan Corporation on 8 of the 15 factors compared between the two stocks.

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.

About Seaspan Corporation

Seaspan Corporation is an independent charter owner and manager of containerships. The Company charters pursuant to long-term, fixed-rate time charters with various container liner companies. As of February 20, 2017, it had operated a fleet of 88 containerships and had entered into contracts for the purchase of an additional eight new building containerships. Its operating vessels include YM Wish, YM Wellhead, YM Witness, COSCO Glory, COSCO Development, COSCO Harmony, COSCO Excellence, COSCO Hope, COSCO Fortune, Seaspan Yangtze, CSCL Zeebrugge, CSCL Long Beach, CSCL Oceania, COSCO Vietnam, MOL Emissary, Seaspan Chiwan, Seaspan Ningbo, Seaspan Felixstowe, CSCL Brisbane, Seaspan Santos, Seaspan Loncomilla, Seaspan Lingue, CSCL Montevideo, CSCL Callao, Guayaquil Bridge and Calicanto Bridge. The Company is engaged in the operation and management of vessel, including maintaining the vessel, periodic dry-docking, cleaning and painting and performing work required by regulations.

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