Critical Analysis: KNOT Offshore Partners (NYSE:KNOP) vs. Global Ship Lease (NYSE:GSL)

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

Volatility and Risk

Global Ship Lease has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, KNOT Offshore Partners has a beta of -0.14, meaning that its share price is 114% less volatile than the S&P 500.

Institutional and Insider Ownership

50.1% of Global Ship Lease shares are held by institutional investors. Comparatively, 26.8% of KNOT Offshore Partners shares are held by institutional investors. 7.4% of Global Ship Lease shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Global Ship Lease pays an annual dividend of $2.50 per share and has a dividend yield of 7.0%. KNOT Offshore Partners pays an annual dividend of $0.10 per share and has a dividend yield of 1.0%. Global Ship Lease pays out 22.4% of its earnings in the form of a dividend. KNOT Offshore Partners pays out 6.5% 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. Global Ship Lease has raised its dividend for 2 consecutive years. Global Ship Lease is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Global Ship Lease and KNOT Offshore Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Global Ship Lease	53.62%	23.98%	14.94%
KNOT Offshore Partners	14.69%	9.00%	2.93%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Global Ship Lease and KNOT Offshore Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Global Ship Lease	0	2	2	0	2.50
KNOT Offshore Partners	0	4	0	1	2.40

Global Ship Lease currently has a consensus price target of $33.50, suggesting a potential downside of 6.18%. Given Global Ship Lease’s stronger consensus rating and higher probable upside, equities analysts plainly believe Global Ship Lease is more favorable than KNOT Offshore Partners.

Earnings and Valuation

This table compares Global Ship Lease and KNOT Offshore Partners”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Global Ship Lease	$711.05 million	1.80	$353.63 million	$11.14	3.21
KNOT Offshore Partners	$359.21 million	1.00	$13.93 million	$1.55	6.76

Global Ship Lease has higher revenue and earnings than KNOT Offshore Partners. Global Ship Lease 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.

Summary

Global Ship Lease beats KNOT Offshore Partners on 15 of the 18 factors compared between the two stocks.

About Global Ship Lease

Global Ship Lease, Inc., together with its subsidiaries, engages in owning and chartering of containerships under fixed-rate charters to container shipping companies worldwide. As of March 11, 2024, it owned 68 mid-sized and smaller containerships, ranging from 2,207 to 11,040 twenty-foot equivalent unit (TEU), with an aggregate capacity of 375,406 TEU. The company was founded in 2007 and is based in Athens, Greece.

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.