Critical Comparison: SemGroup (NYSE:SEMG) vs. Teekay Tankers (TNK)

SemGroup (NYSE: SEMG) and Teekay Tankers (NYSE:TNK) are both small-cap oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, profitability, risk, institutional ownership, analyst recommendations, earnings and dividends.

Insider and Institutional Ownership

28.6% of Teekay Tankers shares are held by institutional investors. 0.8% of SemGroup shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

SemGroup pays an annual dividend of $1.80 per share and has a dividend yield of 6.9%. Teekay Tankers pays an annual dividend of $0.12 per share and has a dividend yield of 10.4%. SemGroup pays out -2,250.0% of its earnings in the form of a dividend. Teekay Tankers pays out -42.9% 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.

Valuation & Earnings

This table compares SemGroup and Teekay Tankers’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SemGroup $1.33 billion 1.55 $2.09 million ($0.08) -328.13
Teekay Tankers $300.30 million 0.69 $62.85 million ($0.28) -4.11

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

Volatility and Risk

SemGroup has a beta of 1.87, indicating that its stock price is 87% more volatile than the S&P 500. Comparatively, Teekay Tankers has a beta of 2.18, indicating that its stock price is 118% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for SemGroup and Teekay Tankers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SemGroup 0 4 3 0 2.43
Teekay Tankers 1 2 1 0 2.00

SemGroup presently has a consensus price target of $30.60, indicating a potential upside of 16.57%. Teekay Tankers has a consensus price target of $1.87, indicating a potential upside of 62.32%. Given Teekay Tankers’ higher probable upside, analysts plainly believe Teekay Tankers is more favorable than SemGroup.

Profitability

This table compares SemGroup and Teekay Tankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SemGroup -0.41% 5.96% 2.40%
Teekay Tankers -11.43% -0.99% -0.49%

Summary

SemGroup beats Teekay Tankers on 10 of the 16 factors compared between the two stocks.

SemGroup Company Profile

SemGroup Corporation is a provider of gathering, transportation, storage, distribution, marketing and other midstream services to producers, refiners of petroleum products and other market participants located in the Midwest and Rocky Mountain regions of the United States and Canada. The Company’s segments include Crude Transportation, which operates crude oil pipelines and truck transportation businesses in the United States; Crude Facilities, which operates crude oil storage and terminal businesses in the United States; Crude Supply and Logistics, which operates a crude oil marketing business; SemGas, which provides natural gas gathering and processing services; SemCAMS, which operates natural gas processing and gathering facilities in Alberta, Canada; SemLogistics, which owns petroleum products storage facility in the United Kingdom, and SemMexico, which provides liquid asphalt cement products and product application services to the Mexican market, and Corporate and Other.

Teekay Tankers Company Profile

Teekay Tankers Ltd. is an international provider of marine transportation to the oil industries. The Company’s business is to own crude oil and product tankers. The Company has two segments: conventional tanker and ship-to-ship transfer. Its conventional tanker segment consists of the operation of all of its tankers, including those employed on full service lightering contracts. Its ship-to-ship transfer segment consists of its lightering support services, including those provided to the Company’s conventional tanker segment as part of full service lightering operations and other related services. Its operations are managed by Teekay Tankers Management Services Ltd., which provides the Company with commercial, technical, administrative and strategic services. Its fleet consists of approximately 60 conventional vessels (including over 10 in-chartered vessels and an approximately 50%-owned very large crude carrier (VLCC)) and approximately six ship-to-ship (STS) support vessels.

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