Scorpio Tankers (NYSE: STNG) and KNOT Offshore Partners (NYSE:KNOP) are both small-cap transportation companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, valuation, profitability and risk.
Scorpio Tankers pays an annual dividend of $0.04 per share and has a dividend yield of 1.3%. KNOT Offshore Partners pays an annual dividend of $2.08 per share and has a dividend yield of 10.3%. Scorpio Tankers pays out -5.1% of its earnings in the form of a dividend. KNOT Offshore Partners pays out 87.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Scorpio Tankers has increased its dividend for 3 consecutive years and KNOT Offshore Partners has increased its dividend for 3 consecutive years.
This table compares Scorpio Tankers and KNOT Offshore Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|KNOT Offshore Partners||34.02%||11.18%||4.40%|
This is a breakdown of recent ratings and price targets for Scorpio Tankers and KNOT Offshore Partners, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|KNOT Offshore Partners||0||0||0||0||N/A|
Scorpio Tankers currently has a consensus price target of $6.44, indicating a potential upside of 107.66%. Given Scorpio Tankers’ higher possible upside, equities research analysts clearly believe Scorpio Tankers is more favorable than KNOT Offshore Partners.
Institutional & Insider Ownership
65.1% of Scorpio Tankers shares are held by institutional investors. Comparatively, 43.8% of KNOT Offshore Partners shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares Scorpio Tankers and KNOT Offshore Partners’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Scorpio Tankers||$522.75 million||1.67||-$24.90 million||($0.79)||-3.92|
|KNOT Offshore Partners||$173.67 million||3.80||$59.84 million||$2.38||8.49|
KNOT Offshore Partners has lower revenue, but higher earnings than Scorpio Tankers. Scorpio Tankers 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
Scorpio Tankers has a beta of 1.61, suggesting that its share price is 61% more volatile than the S&P 500. Comparatively, KNOT Offshore Partners has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500.
KNOT Offshore Partners beats Scorpio Tankers on 7 of the 13 factors compared between the two stocks.
About Scorpio Tankers
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.
About KNOT Offshore Partners
KNOT Offshore Partners LP (KNOT Offshore Partners or the Partnership), owns, operates and acquires shuttle tankers under long-term charters. The Partnership’s vessels in its fleet are chartered to Statoil ASA (Statoil), Petrobras Transporte S.A. (Transpetro), Repsol Sinopec Brasil, S.A. (Repsol), Royal Dutch Shell plc, ExxonMobil, and Eni Trading and Shipping S.p.A. (ENI). As of March 17, 2017, the Company had a fleet of 12 shuttle tankers. Its shuttle tankers include Fortaleza Knutsen, Recife Knutsen, Bodil Knutsen and Dan Cisne. KNOT Offshore Partners GP LLC is the general partner of the Partnership. It is engaged in the loading, transportation and storage of the crude oil using the vessels in its fleet. It provides all of these services under time charters and bareboat charters. As of December 31, 2016, eight of its shuttle tankers were chartered under time charters and four of its shuttle tankers were chartered under bareboat charters.
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