Contrasting KNOT Offshore Partners (NYSE:KNOP) and Navigator (NYSE:NVGS)

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

Insider & Institutional Ownership

26.8% of KNOT Offshore Partners shares are held by institutional investors. Comparatively, 19.0% of Navigator shares are held by institutional investors. 0.4% of Navigator shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
KNOT Offshore Partners	6.38%	7.30%	2.35%
Navigator	17.06%	6.35%	3.47%

Dividends

KNOT Offshore Partners pays an annual dividend of $0.10 per share and has a dividend yield of 1.0%. Navigator pays an annual dividend of $0.28 per share and has a dividend yield of 1.4%. KNOT Offshore Partners pays out 14.7% of its earnings in the form of a dividend. Navigator pays out 18.9% 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. Navigator has raised its dividend for 1 consecutive years. Navigator is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations for KNOT Offshore Partners and Navigator, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KNOT Offshore Partners	0	4	1	0	2.20
Navigator	0	1	4	0	2.80

KNOT Offshore Partners currently has a consensus price target of $14.00, indicating a potential upside of 39.99%. Navigator has a consensus price target of $21.50, indicating a potential upside of 6.54%. Given KNOT Offshore Partners’ higher possible upside, equities research analysts clearly believe KNOT Offshore Partners is more favorable than Navigator.

Valuation and Earnings

This table compares KNOT Offshore Partners and Navigator”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KNOT Offshore Partners	$364.44 million	0.93	$23.26 million	$0.68	14.71
Navigator	$586.96 million	2.24	$100.12 million	$1.48	13.64

Navigator has higher revenue and earnings than KNOT Offshore Partners. Navigator 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.

Volatility and Risk

KNOT Offshore Partners has a beta of -0.1, suggesting that its share price is 110% less volatile than the S&P 500. Comparatively, Navigator has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500.

Summary

Navigator beats KNOT Offshore Partners on 12 of the 17 factors compared between the two stocks.

About KNOT Offshore Partners

KNOT Offshore Partners LP acquires, owns, and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides loading, transportation, and discharge of crude oil under time charters and bareboat charters. The company was founded in 2013 and is headquartered in Aberdeen, the United Kingdom.

About Navigator

Navigator Holdings Ltd. engages in owning and operating a fleet of liquefied gas carriers worldwide. It provides international and regional seaborne transportation services of petrochemical gases, liquefied petroleum gases, and ammonia for energy companies, industrial users, and commodity traders. The company also offers ship shore infrastructure and consultancy services. It operates a fleet of 56 semi- or fully-refrigerated liquefied gas carriers. The company was formerly known as Isle of Man public limited company and changed its name to Navigator Holdings Ltd. in 2006. Navigator Holdings Ltd. was incorporated in 1997 and is based in London, the United Kingdom.