International Seaways (NYSE: INSW) and Scorpio Tankers (NYSE:STNG) are both small-cap transportation companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Dividends

Scorpio Tankers pays an annual dividend of $0.04 per share and has a dividend yield of 1.3%. International Seaways does not pay a dividend. 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 International Seaways and Scorpio Tankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
International Seaways -23.86% 1.36% 0.95%
Scorpio Tankers -31.12% -6.47% -2.52%

Valuation & Earnings

This table compares International Seaways and Scorpio Tankers’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
International Seaways $398.32 million 1.24 -$18.22 million ($2.51) -6.74
Scorpio Tankers $522.75 million 1.80 -$24.90 million ($0.79) -3.82

International Seaways has higher earnings, but lower revenue than Scorpio Tankers. International Seaways is trading at a lower price-to-earnings ratio than Scorpio Tankers, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for International Seaways and Scorpio Tankers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
International Seaways 0 0 1 0 3.00
Scorpio Tankers 0 0 11 0 3.00

International Seaways currently has a consensus price target of $30.00, suggesting a potential upside of 77.30%. Scorpio Tankers has a consensus price target of $6.44, suggesting a potential upside of 113.16%. Given Scorpio Tankers’ higher possible upside, analysts plainly believe Scorpio Tankers is more favorable than International Seaways.

Institutional and Insider Ownership

86.3% of International Seaways shares are held by institutional investors. Comparatively, 65.4% of Scorpio Tankers shares are held by institutional investors. 0.5% of International Seaways shares are held by 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.

Summary

Scorpio Tankers beats International Seaways on 8 of the 14 factors compared between the two stocks.

International Seaways Company Profile

International Seaways, Inc. and its subsidiaries own and operate a fleet of oceangoing vessels. The Company’s oceangoing vessels engage in the transportation of crude oil and petroleum products in the International Flag trades. The Company’s segments are International Crude Tankers and International Product Carriers. Its 55-vessel fleet consists of Ultra Large Crude Carrier (ULCC), Very Large Crude Carrier (VLCC), Aframax and Panamax crude tankers, as well as long range 1 (LR1), LR2 and medium range (MR) product carriers. Its International Crude Tankers segment is made up of a ULCC and a fleet of VLCCs, Aframaxes, and Panamaxes. Its International Product Carriers segment consists of a fleet of MRs, LR1s and an LR2 engaged in the transportation of crude and refined petroleum products. Through joint venture partnerships (the JVs), it has ownership interests in approximately four liquefied natural gas carriers and approximately two floating storage and offloading service vessels.

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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