Contrasting Matson (NYSE:MATX) & Danaos (NYSE:DAC)

Danaos (NYSE:DAC) and Matson (NYSE:MATX) are both mid-cap industrials companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitability, risk and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Danaos	51.26%	13.20%	10.08%
Matson	13.41%	16.94%	10.01%

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Danaos	$1.06 billion	2.33	$494.61 million	$29.55	4.58
Matson	$3.34 billion	1.83	$444.80 million	$14.96	13.70

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

Institutional & Insider Ownership

19.0% of Danaos shares are held by institutional investors. Comparatively, 84.8% of Matson shares are held by institutional investors. 41.0% of Danaos shares are held by company insiders. Comparatively, 2.5% of Matson shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Danaos pays an annual dividend of $3.60 per share and has a dividend yield of 2.7%. Matson pays an annual dividend of $1.52 per share and has a dividend yield of 0.7%. Danaos pays out 12.2% of its earnings in the form of a dividend. Matson pays out 10.2% 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 raised its dividend for 3 consecutive years and Matson has raised its dividend for 13 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Danaos and Matson, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Danaos	0	0	0	3	4.00
Matson	0	0	4	1	3.20

Matson has a consensus target price of $232.33, suggesting a potential upside of 13.35%. Given Matson’s higher possible upside, analysts clearly believe Matson is more favorable than Danaos.

Volatility & Risk

Danaos has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, Matson has a beta of 1.27, meaning that its share price is 27% more volatile than the S&P 500.

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.

About Matson

Matson, Inc., together with its subsidiaries, engages in the provision of ocean transportation and logistics services. It operates through two segments, Ocean Transportation and Logistics. The Ocean Transportation segment offers ocean freight transportation services to the domestic non-contiguous economies of Hawaii, Japan, Alaska, and Guam, as well as to other island economies in Micronesia. It primarily transports dry containers of mixed commodities, refrigerated commodities, food products, beverages, building materials, automobiles, and household goods; livestock; seafood; general sustenance cargo; and garments, footwear, e-commerce, and other retail merchandise. This segment also operates an expedited service from China to Long Beach, California, and various islands in the South Pacific, as well as Okinawa, Japan; and provides stevedoring, refrigerated cargo services, inland transportation, container equipment maintenance, and other terminal services to ocean carriers on the Hawaiian islands of Oahu, Hawaii, Maui, and Kauai, as well as in the Alaska locations of Anchorage, Kodiak, and Dutch Harbor. In addition, it offers vessel management and container transshipment services. The Logistics segment provides multimodal transportation brokerage services, including domestic and international rail intermodal, long-haul and regional highway trucking, specialized hauling, flat-bed and project, less-than-truckload, and expedited freight services; less-than-container load consolidation and freight forwarding services; warehousing and distribution services; supply chain management services, and non-vessel operating common carrier freight forwarding services. It serves the U.S. military, freight forwarders, retailers, consumer goods, automobile manufacturers, and other customers. The company was formerly known as Alexander & Baldwin Holdings, Inc. and changed its name to Matson, Inc. in June 2012. Matson, Inc. was founded in 1882 and is headquartered in Honolulu, Hawaii.