DHT (NYSE: DHT) and Scorpio Tankers (NYSE:STNG) are both small-cap energy companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.
Volatility and Risk
DHT has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500. Comparatively, Scorpio Tankers has a beta of 1.58, meaning that its stock price is 58% more volatile than the S&P 500.
DHT pays an annual dividend of $0.08 per share and has a dividend yield of 2.2%. Scorpio Tankers pays an annual dividend of $0.04 per share and has a dividend yield of 1.3%. DHT pays out 25.0% of its earnings in the form of a dividend. Scorpio Tankers pays out -5.1% 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. DHT has increased its dividend for 3 consecutive years and Scorpio Tankers has increased its dividend for 2 consecutive years. DHT is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of recent recommendations and price targets for DHT and Scorpio Tankers, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
DHT currently has a consensus target price of $6.00, suggesting a potential upside of 65.29%. Scorpio Tankers has a consensus target price of $6.44, suggesting a potential upside of 113.87%. Given Scorpio Tankers’ stronger consensus rating and higher probable upside, analysts plainly believe Scorpio Tankers is more favorable than DHT.
Earnings and Valuation
This table compares DHT and Scorpio Tankers’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|DHT||$290.70 million||1.78||$9.25 million||$0.32||11.34|
|Scorpio Tankers||$522.75 million||1.79||-$24.90 million||($0.79)||-3.81|
DHT has higher earnings, but lower revenue 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.
Insider & Institutional Ownership
35.7% of DHT shares are held by institutional investors. Comparatively, 65.4% of Scorpio Tankers shares are held 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.
This table compares DHT and Scorpio Tankers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Scorpio Tankers beats DHT on 8 of the 15 factors compared between the two stocks.
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.
About Scorpio Tankers
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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