Critical Review: Ardmore Shipping (NYSE:ASC) vs. Flex LNG (NYSE:FLNG)

Ardmore Shipping (NYSE:ASC) and Flex LNG (NYSE:FLNG) are both small-cap transportation companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.

Risk & Volatility

Ardmore Shipping has a beta of 0.03, indicating that its share price is 97% less volatile than the S&P 500. Comparatively, Flex LNG has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500.

Profitability

This table compares Ardmore Shipping and Flex LNG’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ardmore Shipping	18.00%	9.63%	7.92%
Flex LNG	22.26%	12.15%	3.37%

Valuation and Earnings

This table compares Ardmore Shipping and Flex LNG”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ardmore Shipping	$310.20 million	2.47	$41.01 million	$1.33	14.16
Flex LNG	$347.64 million	4.96	$74.82 million	$1.40	22.78

Flex LNG has higher revenue and earnings than Ardmore Shipping. Ardmore Shipping is trading at a lower price-to-earnings ratio than Flex LNG, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Ardmore Shipping and Flex LNG, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ardmore Shipping	0	2	2	0	2.50
Flex LNG	2	2	0	0	1.50

Ardmore Shipping currently has a consensus target price of $17.00, suggesting a potential downside of 9.71%. Flex LNG has a consensus target price of $24.00, suggesting a potential downside of 24.74%. Given Ardmore Shipping’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Ardmore Shipping is more favorable than Flex LNG.

Insider and Institutional Ownership

62.2% of Ardmore Shipping shares are held by institutional investors. 0.3% of Flex LNG shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Ardmore Shipping pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. Flex LNG pays an annual dividend of $3.00 per share and has a dividend yield of 9.4%. Ardmore Shipping pays out 27.1% of its earnings in the form of a dividend. Flex LNG pays out 214.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Flex LNG beats Ardmore Shipping on 10 of the 16 factors compared between the two stocks.

About Ardmore Shipping

Ardmore Shipping Corporation engages in the seaborne transportation of petroleum products and chemicals worldwide. The company's fleet consists of 22 owned vessels including 21 Eco-design and 1 Eco-mod vessel, and four chartered-in vessels. It serves oil majors, oil companies, oil and chemical traders, chemical companies, and pooling service providers. Ardmore Shipping Corporation was founded in 2010 and is headquartered in Pembroke, Bermuda.

About Flex LNG

FLEX LNG Ltd. engages in the seaborne transportation of liquefied natural gas (LPG) through the ownership and operation of LNG carriers. The company was founded by Philip Eystein Fjeld, Trym Tveitnes and Jostein Ueland in September 2006 and is headquartered in Hamilton, Bermuda.