Financial Analysis: Scorpio Tankers (STNG) vs. Dorian LPG (LPG)
Scorpio Tankers (NYSE: STNG) and Dorian LPG (NYSE:LPG) are both small-cap transportation companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.
Institutional and Insider Ownership
65.4% of Scorpio Tankers shares are held by institutional investors. Comparatively, 47.7% of Dorian LPG shares are held by institutional investors. 26.5% of Dorian LPG shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This is a breakdown of current ratings for Scorpio Tankers and Dorian LPG, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Scorpio Tankers currently has a consensus target price of $6.44, indicating a potential upside of 113.16%. Dorian LPG has a consensus target price of $10.00, indicating a potential upside of 42.05%. Given Scorpio Tankers’ stronger consensus rating and higher probable upside, analysts plainly believe Scorpio Tankers is more favorable than Dorian LPG.
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. Scorpio Tankers has increased its dividend for 3 consecutive years.
This table compares Scorpio Tankers and Dorian LPG’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & Risk
Scorpio Tankers has a beta of 1.58, suggesting that its share price is 58% more volatile than the S&P 500. Comparatively, Dorian LPG has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.
Earnings & Valuation
This table compares Scorpio Tankers and Dorian LPG’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Scorpio Tankers||$522.75 million||1.80||-$24.90 million||($0.79)||-3.82|
|Dorian LPG||$167.45 million||2.32||-$1.44 million||($0.21)||-33.52|
Dorian LPG has lower revenue, but higher earnings 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.
Scorpio Tankers beats Dorian LPG on 9 of the 16 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 Dorian LPG
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.
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