Teekay (NYSE: TK) and Scorpio Tankers (NYSE:STNG) are both small-cap transportation companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, valuation, risk, institutional ownership, earnings, analyst recommendations and dividends.
Teekay pays an annual dividend of $0.22 per share and has a dividend yield of 2.1%. Scorpio Tankers pays an annual dividend of $0.04 per share and has a dividend yield of 1.2%. Teekay pays out -13.3% of its earnings in the form of a dividend. Scorpio Tankers pays out -5.1% 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. Teekay has increased its dividend for 4 consecutive years. Teekay is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Teekay and Scorpio Tankers’ gross revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
Scorpio Tankers has lower revenue, but higher earnings than Teekay. Teekay is trading at a lower price-to-earnings ratio than Scorpio Tankers, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and recommmendations for Teekay and Scorpio Tankers, as provided by MarketBeat.com.
||Strong Buy Ratings
Teekay presently has a consensus target price of $5.50, suggesting a potential downside of 47.82%. Scorpio Tankers has a consensus target price of $6.38, suggesting a potential upside of 97.37%. Given Scorpio Tankers’ stronger consensus rating and higher probable upside, analysts clearly believe Scorpio Tankers is more favorable than Teekay.
Institutional and Insider Ownership
27.7% of Teekay shares are owned by institutional investors. Comparatively, 59.0% of Scorpio Tankers shares are owned by institutional investors. 2.4% of Teekay shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This table compares Teekay and Scorpio Tankers’ net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
Volatility & Risk
Teekay has a beta of 1.67, meaning that its share price is 67% more volatile than the S&P 500. Comparatively, Scorpio Tankers has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500.
Teekay beats Scorpio Tankers on 9 of the 17 factors compared between the two stocks.
Teekay Company Profile
Teekay Corporation (Teekay) is a provider of crude oil and gas marine transportation services. The Company also offers offshore oil production, storage and offloading services, primarily under long-term, fixed-rate contracts. The Company is engaged in the liquefied natural gas (LNG) and liquefied petroleum gas (LPG) shipping sectors, as well as in the operations in the offshore production, storage and transportation sector. It is also involved in the conventional tanker business. Teekay provides a set of marine services to the oil and gas companies. The Company has four lines of business: offshore logistics (shuttle tankers, the HiLoad DP unit, floating storage and off-take (FSO) units, units for maintenance and safety (UMS), and long-distance towing and offshore installation vessels), offshore production (floating production, storage and offloading (FPSO) units), liquefied gas carriers and conventional tankers.
Scorpio Tankers Company Profile
Scorpio Tankers Inc. (Scorpio Tankers) is engaged in the seaborne transportation of refined petroleum products in the international shipping markets. The Company operates through four segments: Handymax, MR, LR1/Panamax and LR2. As of March 15, 2017, the Company’s fleet consisted of 78 owned tankers (22 LR2, 14 Handymax and 42 MR) with a weighted average age of approximately 2.3 years, and 19 time or bareboat chartered-in tankers, which it operated (one LR2, one LR1, eight MR and nine Handymax) (collectively referred to as its Operating Fleet). As of March 1, 2017, the Company’s total oil tanker fleet (crude, products and product/chemical tankers) consisted of 4,754 ships with a combined capacity of 525.9 million deadweight tonnage. As of December 31, 2016, the Company also had contracts for the construction of one LR2 tanker and eight MR tankers. Its vessels include STI Brixton, STI Comandante, STI Finchley, STI Hammersmith, STI Larvotto, STI San Antonio and STI Regina.
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