Analyzing Nordic American Tanker (NAT) and Scorpio Tankers (STNG)

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

Institutional and Insider Ownership

23.6% of Nordic American Tanker shares are owned by institutional investors. Comparatively, 59.0% of Scorpio Tankers shares are owned by institutional investors. 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.

Valuation & Earnings

This table compares Nordic American Tanker and Scorpio Tankers’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nordic American Tanker $236.79 million 1.50 -$4.45 million N/A N/A
Scorpio Tankers $522.75 million 1.87 -$24.90 million ($0.79) -3.97

Nordic American Tanker has higher earnings, but lower revenue than Scorpio Tankers.

Risk and Volatility

Nordic American Tanker has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500. Comparatively, Scorpio Tankers has a beta of 1.58, suggesting that its stock price is 58% more volatile than the S&P 500.

Dividends

Nordic American Tanker pays an annual dividend of $0.12 per share and has a dividend yield of 4.8%. Scorpio Tankers pays an annual dividend of $0.04 per share and has a dividend yield of 1.3%. Scorpio Tankers pays out -5.1% of its earnings in the form of a dividend. Scorpio Tankers has raised its dividend for 3 consecutive years.

Profitability

This table compares Nordic American Tanker and Scorpio Tankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nordic American Tanker -32.51% -6.49% -4.09%
Scorpio Tankers -31.12% -6.47% -2.52%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Nordic American Tanker and Scorpio Tankers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nordic American Tanker 2 3 0 0 1.60
Scorpio Tankers 0 0 11 0 3.00

Nordic American Tanker presently has a consensus target price of $4.80, suggesting a potential upside of 92.00%. Scorpio Tankers has a consensus target price of $6.38, suggesting a potential upside of 103.03%. Given Scorpio Tankers’ stronger consensus rating and higher possible upside, analysts clearly believe Scorpio Tankers is more favorable than Nordic American Tanker.

Summary

Scorpio Tankers beats Nordic American Tanker on 12 of the 14 factors compared between the two stocks.

Nordic American Tanker Company Profile

Nordic American Tankers Limited is an international tanker company. The Company owns approximately 26 vessels, including approximately two new buildings under construction, of approximately 156,000 deadweight tonnage (dwt) each. The Company’s Suezmaxes tankers can carry over one million barrels of oil. The vessels in the Company’s fleet are homogenous and interchangeable. The Company’s vessels are employed in the spot market. The Company’s vessels include Nordic Harrier, Nordic Hawk, Nordic Hunter, Nordic Voyager, Nordic Fighter, Nordic Freedom, Nordic Discovery, Nordic Saturn, Nordic Jupiter, Nordic Moon, Nordic Apollo, Nordic Cosmos, Nordic Sprite, Nordic Mistral, Nordic Passat, Nordic Vega, Nordic Breeze, Nordic Zenith, Nordic Sprinter, Nordic Skier and Nordic Light.

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.

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