Teekay Tankers (NYSE: TNK) and Tallgrass Energy GP, (NYSE:TEGP) are both small-cap transportation companies, but which is the superior business? We will compare the two companies based on the strength of their risk, institutional ownership, earnings, profitabiliy, dividends, valuation and analyst recommendations.

Valuation and Earnings

This table compares Teekay Tankers and Tallgrass Energy GP,’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Teekay Tankers $487.04 million 0.59 $148.71 million $0.17 10.29
Tallgrass Energy GP, $602.35 million 2.54 $346.46 million $0.60 43.95

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

Volatility and Risk

Teekay Tankers has a beta of 2.24, meaning that its stock price is 124% more volatile than the S&P 500. Comparatively, Tallgrass Energy GP, has a beta of 2.17, meaning that its stock price is 117% more volatile than the S&P 500.

Institutional & Insider Ownership

41.8% of Teekay Tankers shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Teekay Tankers and Tallgrass Energy GP,, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Teekay Tankers 2 3 0 0 1.60
Tallgrass Energy GP, 1 5 4 0 2.30

Teekay Tankers presently has a consensus target price of $2.43, suggesting a potential upside of 39.05%. Tallgrass Energy GP, has a consensus target price of $29.00, suggesting a potential upside of 9.97%. Given Teekay Tankers’ higher probable upside, equities research analysts clearly believe Teekay Tankers is more favorable than Tallgrass Energy GP,.

Dividends

Teekay Tankers pays an annual dividend of $0.12 per share and has a dividend yield of 6.9%. Tallgrass Energy GP, pays an annual dividend of $1.15 per share and has a dividend yield of 4.4%. Teekay Tankers pays out 70.6% of its earnings in the form of a dividend. Tallgrass Energy GP, pays out 191.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Teekay Tankers is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Teekay Tankers and Tallgrass Energy GP,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Teekay Tankers 5.48% 4.58% 2.17%
Tallgrass Energy GP, 5.17% 1.69% 0.86%

Summary

Teekay Tankers beats Tallgrass Energy GP, on 8 of the 15 factors compared between the two stocks.

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.

Tallgrass Energy GP, Company Profile

Tallgrass Energy GP, LP is a limited partnership company, which includes the operations of Tallgrass Equity, LLC (Tallgrass Equity), Tallgrass MLP GP, LLC, Tallgrass Energy Partners, LP (TEP), and TEP’s subsidiaries. TEP owns, operates, acquires and develops midstream energy assets in North America. TEP’s segments include Crude Oil Transportation & Logistics, which is engaged in the ownership and operation of a crude oil pipeline system, and crude oil storage and terminaling facilities; Natural Gas Transportation & Logistics, which is engaged in the ownership and operation of interstate natural gas pipelines and integrated natural gas storage facilities; Processing & Logistics, which is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities, and the provision of water business services to the oil and gas exploration and production industry, and Corporate and Other.

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