Scorpio Tankers (NYSE: STNG) and Teekay (NYSE:TK) are both small-cap transportation companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Analyst Ratings

This is a summary of current ratings and price targets for Scorpio Tankers and Teekay, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Scorpio Tankers 0 0 11 0 3.00
Teekay 1 2 0 0 1.67

Scorpio Tankers presently has a consensus target price of $6.44, indicating a potential upside of 103.08%. Teekay has a consensus target price of $5.50, indicating a potential downside of 39.82%. Given Scorpio Tankers’ stronger consensus rating and higher probable upside, analysts clearly believe Scorpio Tankers is more favorable than Teekay.

Profitability

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

Net Margins Return on Equity Return on Assets
Scorpio Tankers -31.12% -6.47% -2.52%
Teekay -6.66% -3.48% -1.12%

Dividends

Scorpio Tankers pays an annual dividend of $0.04 per share and has a dividend yield of 1.3%. Teekay pays an annual dividend of $0.22 per share and has a dividend yield of 2.4%. Scorpio Tankers pays out -5.1% of its earnings in the form of a dividend. Teekay pays out -13.3% 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. Scorpio Tankers has raised its dividend for 2 consecutive years and Teekay has raised its dividend for 3 consecutive years. Teekay is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Scorpio Tankers has a beta of 1.58, meaning that its share price is 58% more volatile than the S&P 500. Comparatively, Teekay has a beta of 1.68, meaning that its share price is 68% more volatile than the S&P 500.

Institutional & Insider Ownership

59.1% of Scorpio Tankers shares are held by institutional investors. Comparatively, 27.9% of Teekay shares are held by institutional investors. 2.4% of Teekay shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Scorpio Tankers $522.75 million 1.89 -$24.90 million ($0.79) -4.01
Teekay $2.33 billion 0.34 -$123.18 million ($1.65) -5.54

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

Summary

Teekay beats Scorpio Tankers on 9 of the 16 factors compared between the two stocks.

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.

Teekay Company Profile

Teekay Corporation (Teekay) is a provider of crude oil and gas marine transportation services. The Company also offers offshore oil production, storage and offloading services, primarily under long-term, fixed-rate contracts. The Company is engaged in the liquefied natural gas (LNG) and liquefied petroleum gas (LPG) shipping sectors, as well as in the operations in the offshore production, storage and transportation sector. It is also involved in the conventional tanker business. Teekay provides a set of marine services to the oil and gas companies. The Company has four lines of business: offshore logistics (shuttle tankers, the HiLoad DP unit, floating storage and off-take (FSO) units, units for maintenance and safety (UMS), and long-distance towing and offshore installation vessels), offshore production (floating production, storage and offloading (FPSO) units), liquefied gas carriers and conventional tankers.

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