Analyzing Scorpio Tankers (STNG) and Dorian LPG (LPG)

Dorian LPG (NYSE: LPG) and Scorpio Tankers (NYSE:STNG) are both small-cap transportation companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Dividends

Scorpio Tankers pays an annual dividend of $0.04 per share and has a dividend yield of 1.3%. Dorian LPG does not pay a dividend. Scorpio Tankers pays out -5.1% of its earnings in the form of a dividend. Dorian LPG has increased its dividend for 3 consecutive years.

Institutional and Insider Ownership

47.7% of Dorian LPG shares are owned by institutional investors. Comparatively, 65.1% of Scorpio Tankers shares are owned by institutional investors. 26.5% of Dorian LPG shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Dorian LPG and Scorpio Tankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dorian LPG -7.30% -4.06% -2.28%
Scorpio Tankers -31.12% -6.47% -2.52%

Risk & Volatility

Dorian LPG has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500. Comparatively, Scorpio Tankers has a beta of 1.59, meaning that its stock price is 59% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Dorian LPG and Scorpio Tankers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dorian LPG 0 1 1 0 2.50
Scorpio Tankers 0 0 11 0 3.00

Dorian LPG presently has a consensus price target of $10.00, indicating a potential upside of 40.65%. Scorpio Tankers has a consensus price target of $6.44, indicating a potential upside of 109.69%. Given Scorpio Tankers’ stronger consensus rating and higher possible upside, analysts clearly believe Scorpio Tankers is more favorable than Dorian LPG.

Valuation and Earnings

This table compares Dorian LPG and Scorpio Tankers’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dorian LPG $167.45 million 2.34 -$1.44 million ($0.21) -33.86
Scorpio Tankers $522.75 million 1.83 -$24.90 million ($0.79) -3.89

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

Dorian LPG Company Profile

Dorian LPG Ltd. is a holding company. The Company, through its subsidiaries, is focused on owning and operating very large gas carrier (VLGCs) in the liquefied petroleum gas (LPG) shipping industry. The Company is engaged in the transportation of LPG across the world through its ownership and operation of LPG tankers. As of March 31, 2016, the Company owned and operated a fleet of 22 VLGCs, including 19 84,000 cubic meter (cbm) ECO-design VLGCs (ECO VLGCs) and three 82,000 cbm VLGCs. The VLGCs in its fleet had an aggregate carrying capacity of approximately 1.8 million cbm at May 26, 2016. It provides in-house commercial and technical management services for all of its vessels. As of May 26, 2016, its VLGCs included Captain Nicholas ML; Captain John NP; Comet; Corsair; Corvette; Cougar; Concorde; Cobra; Continental; Commodore; Constellation; Cheyenne; Cratis; Chaparral; Commander, and Challenger. The Company’s customers include global energy companies, commodity traders and importers.

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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