Financial Survey: Scorpio Tankers (STNG) versus DHT (DHT)

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

Dividends

Scorpio Tankers pays an annual dividend of $0.04 per share and has a dividend yield of 1.2%. DHT pays an annual dividend of $0.08 per share and has a dividend yield of 2.1%. Scorpio Tankers pays out -5.1% of its earnings in the form of a dividend. DHT pays out 25.0% 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 3 consecutive years and DHT has raised its dividend for 2 consecutive years.

Institutional and Insider Ownership

56.3% of Scorpio Tankers shares are held by institutional investors. Comparatively, 36.1% of DHT shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Scorpio Tankers and DHT’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Scorpio Tankers $522.75 million 1.81 -$24.90 million ($0.79) -4.25
DHT $290.70 million 1.89 $9.25 million $0.32 12.06

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Scorpio Tankers and DHT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Scorpio Tankers 0 0 11 0 3.00
DHT 0 1 2 0 2.67

Scorpio Tankers presently has a consensus price target of $6.56, indicating a potential upside of 95.31%. DHT has a consensus price target of $6.00, indicating a potential upside of 55.44%. Given Scorpio Tankers’ stronger consensus rating and higher probable upside, equities analysts plainly believe Scorpio Tankers is more favorable than DHT.

Profitability

This table compares Scorpio Tankers and DHT’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%
DHT 9.68% 4.84% 2.47%

Risk and Volatility

Scorpio Tankers has a beta of 1.62, suggesting that its share price is 62% more volatile than the S&P 500. Comparatively, DHT has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500.

Summary

Scorpio Tankers beats DHT on 8 of the 15 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.

DHT Company Profile

DHT Holdings, Inc. operates a fleet of crude oil tankers. As of March 21, 2017, the Company’s fleet consisted of 21 crude oil tankers in operation. As of March 21, 2017, the Company’s fleet consisted of 19 very large crude carriers (VLCCs), which are tankers ranging in size from 200,000 to 320,000 deadweight tons (dwt), and two Aframax tankers (Aframaxes), which are tankers ranging in size from 80,000 to 120,000 dwt. As of December 31, 2016, the Company’s fleet in operation had a combined carrying capacity of 6,087,095 dwt. As of March 21, 2017, the Company’s VLCCs included DHT Ann, DHT Eagle, DHT Phoenix, DHT Hawk, DHT Condor, DHT Scandinavia, DHT China, DHT Amazon, DHT Redwood, DHT Sundarbans, DHT Taiga, DHT Leopard, DHT Lion, DHT Panther and DHT Puma. As of March 21, 2017, the Company’s Aframaxes are DHT Cathy and DHT Sophie.

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