Ultrapar Participacoes (NYSE:UGP) and Torm (NASDAQ:TRMD) Critical Analysis

Torm (NASDAQ:TRMD) and Ultrapar Participacoes (NYSE:UGP) are both mid-cap energy companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, analyst recommendations, valuation, risk and profitability.

Risk & Volatility

Torm has a beta of 0.12, indicating that its stock price is 88% less volatile than the S&P 500. Comparatively, Ultrapar Participacoes has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Dividends

Torm pays an annual dividend of $7.01 per share and has a dividend yield of 19.8%. Ultrapar Participacoes pays an annual dividend of $0.31 per share and has a dividend yield of 4.3%. Torm pays out 115.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ultrapar Participacoes pays out 50.8% of its earnings in the form of a dividend.

Profitability

This table compares Torm and Ultrapar Participacoes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Torm	35.51%	27.24%	17.96%
Ultrapar Participacoes	2.28%	18.84%	7.17%

Insider & Institutional Ownership

73.9% of Torm shares are held by institutional investors. Comparatively, 3.6% of Ultrapar Participacoes shares are held by institutional investors. 0.4% of Torm shares are held by company insiders. Comparatively, 1.8% of Ultrapar Participacoes shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Torm and Ultrapar Participacoes”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Torm	$1.34 billion	2.70	$285.30 million	$6.07	5.84
Ultrapar Participacoes	$25.51 billion	0.31	$439.48 million	$0.61	11.70

Ultrapar Participacoes has higher revenue and earnings than Torm. Torm is trading at a lower price-to-earnings ratio than Ultrapar Participacoes, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current recommendations for Torm and Ultrapar Participacoes, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Torm	0	2	1	1	2.75
Ultrapar Participacoes	0	4	3	1	2.62

Torm presently has a consensus price target of $38.00, suggesting a potential upside of 7.28%. Ultrapar Participacoes has a consensus price target of $6.54, suggesting a potential downside of 8.34%. Given Torm’s stronger consensus rating and higher probable upside, analysts plainly believe Torm is more favorable than Ultrapar Participacoes.

Summary

Torm beats Ultrapar Participacoes on 9 of the 16 factors compared between the two stocks.

About Torm

TORM plc, a shipping company, owns and operates a fleet of product tankers in the United Kingdom. It operates in two operating segments, Tanker and Marine Exhaust. The Tanker segment transports refined oil products, such as gasoline, jet fuel, kerosene, naphtha, and gas oil, as well as dirty petroleum products, including fuel oil. The Marine Exhaust segment engages in developing and producing advanced and green marine equipment. TORM plc was founded in 1889 and is based in London, the United Kingdom.

About Ultrapar Participacoes

Ultrapar Participações S.A., through its subsidiaries, operates in the energy and infrastructure business in Brazil. The company distributes liquefied petroleum gas to residential, commercial, and industrial consumers, in addition to renewable electricity and compressed natural gas. It also operates in the distribution and marketing of gasoline, ethanol, diesel, fuel oil, kerosene, natural gas for vehicles, and lubricants; and holds AmPm convenience stores and provides JetOil lubricant services. In addition, the company operates liquid bulk storage terminals. Further, it offers digital payments services, combining the abastece aí app and the loyalty program Km de Vantagens. It also exports its products and services to customers in Europe, Singapore, the United States, Canada, other Latin American countries, and internationally. The company was founded in 1937 and is headquartered in São Paulo, Brazil.