Critical Review: Scorpio Tankers (NYSE:STNG) & TORM (NYSE:TRMD)

TORM (NASDAQ:TRMD) and Scorpio Tankers (NYSE:STNG) 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, analyst recommendations, dividends, profitability, risk, earnings and valuation.

Dividends

TORM pays an annual dividend of $1.70 per share and has a dividend yield of 23.9%. Scorpio Tankers pays an annual dividend of $0.40 per share and has a dividend yield of 3.6%. Scorpio Tankers pays out -42.6% of its earnings in the form of a dividend. TORM has increased its dividend for 1 consecutive years and Scorpio Tankers has increased its dividend for 1 consecutive years.

Earnings and Valuation

This table compares TORM and Scorpio Tankers’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TORM $693.00 million 0.76 $166.02 million N/A N/A
Scorpio Tankers $704.33 million 0.93 -$48.49 million ($0.94) -11.91

TORM has higher earnings, but lower revenue than Scorpio Tankers.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TORM 0 0 1 0 3.00
Scorpio Tankers 1 2 6 0 2.56

Scorpio Tankers has a consensus target price of $26.50, indicating a potential upside of 136.61%. Given Scorpio Tankers’ higher possible upside, analysts plainly believe Scorpio Tankers is more favorable than TORM.

Risk and Volatility

TORM has a beta of -412.61, meaning that its stock price is 41,361% less volatile than the S&P 500. Comparatively, Scorpio Tankers has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
TORM 17.76% 14.49% 7.21%
Scorpio Tankers 16.42% 7.80% 3.03%

Institutional and Insider Ownership

72.7% of TORM shares are owned by institutional investors. Comparatively, 48.4% of Scorpio Tankers shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

TORM Company Profile

TORM plc, a product tanker company, engages in the transportation of refined oil products worldwide. The company transports gasoline, jet fuel, naphtha, and diesel oil. As of March 13, 2020, it operated a fleet of approximately 80 vessels. The company was founded in 1889 and is based in London, the United Kingdom. TORM PLC is a subsidiary of Njord Luxco.

Scorpio Tankers Company Profile

Scorpio Tankers Inc., together with its subsidiaries, engages in the seaborne transportation of refined petroleum products in the shipping markets worldwide. As of March 27, 2020, it owned, finance leased, or bareboat chartered 137 product tankers, which included 42 LR2, 12 LR1, 62 MR, and 21 Handymax tankers with an average age of approximately 4.4 years. The company was founded in 2009 and is based in Monaco.

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