Analyzing KNOT Offshore Partners (KNOP) and Golden Ocean Group (GOGL)

KNOT Offshore Partners (NYSE: KNOP) and Golden Ocean Group (NASDAQ:GOGL) are both small-cap transportation companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, risk, analyst recommendations and valuation.

Institutional and Insider Ownership

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45.1% of KNOT Offshore Partners shares are held by institutional investors. Comparatively, 26.5% of Golden Ocean Group 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.

Earnings and Valuation

This table compares KNOT Offshore Partners and Golden Ocean Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KNOT Offshore Partners $219.20 million 3.08 $68.06 million $2.26 9.14
Golden Ocean Group $460.02 million 2.51 -$2.34 million ($0.02) -401.00

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

Dividends

KNOT Offshore Partners pays an annual dividend of $2.08 per share and has a dividend yield of 10.1%. Golden Ocean Group pays an annual dividend of $0.40 per share and has a dividend yield of 5.0%. KNOT Offshore Partners pays out 92.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Golden Ocean Group pays out -2,000.0% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current ratings and target prices for KNOT Offshore Partners and Golden Ocean Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KNOT Offshore Partners 0 1 0 0 2.00
Golden Ocean Group 0 1 5 0 2.83

KNOT Offshore Partners currently has a consensus target price of $21.00, suggesting a potential upside of 1.69%. Golden Ocean Group has a consensus target price of $10.33, suggesting a potential upside of 28.84%. Given Golden Ocean Group’s stronger consensus rating and higher probable upside, analysts clearly believe Golden Ocean Group is more favorable than KNOT Offshore Partners.

Profitability

This table compares KNOT Offshore Partners and Golden Ocean Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KNOT Offshore Partners 31.05% 10.92% 4.16%
Golden Ocean Group -0.51% -0.17% -0.09%

Volatility and Risk

KNOT Offshore Partners has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, Golden Ocean Group has a beta of 1.95, meaning that its stock price is 95% more volatile than the S&P 500.

Summary

KNOT Offshore Partners beats Golden Ocean Group on 9 of the 15 factors compared between the two stocks.

About KNOT Offshore Partners

KNOT Offshore Partners LP owns and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides crude oil loading, transportation, and storage services under time charters and bareboat charters. As of June 30, 2017, it had a fleet of 13 shuttle tankers. KNOT Offshore Partners GP LLC serves as the general partner of the company. The company was founded in 2013 and is headquartered in Aberdeen, the United Kingdom.

About Golden Ocean Group

Golden Ocean Group Limited, a shipping company, engages in the transportation of bulk commodities worldwide. It owns and operates a fleet of dry bulk vessels, including Newcastlemax, Capesize, Kamsarmax, Panamax, and Supramax vessels. The company transports bulk commodities, such as ores, coal, grains, and fertilizers along worldwide shipping routes. Golden Ocean Group Limited owns and controls a fleet of 70 vessels, including newbuildings and vessels chartered on long term time charter contracts. The company is based in Hamilton, Bermuda.

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