Financial Review: Teekay Tankers (TNK) and Nordic American Tanker (NAT)

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

Dividends

Teekay Tankers pays an annual dividend of $0.06 per share and has a dividend yield of 5.7%. Nordic American Tanker pays an annual dividend of $0.04 per share and has a dividend yield of 1.8%. Teekay Tankers pays out -54.5% of its earnings in the form of a dividend. Nordic American Tanker pays out -5.6% 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. Teekay Tankers is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

27.4% of Teekay Tankers shares are held by institutional investors. Comparatively, 25.1% of Nordic American Tanker shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Teekay Tankers and Nordic American Tanker’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Teekay Tankers $431.18 million 0.66 -$58.02 million ($0.11) -9.64
Nordic American Tanker $154.68 million 2.06 -$204.96 million ($0.71) -3.15

Teekay Tankers has higher revenue and earnings than Nordic American Tanker. Teekay Tankers is trading at a lower price-to-earnings ratio than Nordic American Tanker, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Teekay Tankers has a beta of 1.84, indicating that its stock price is 84% more volatile than the S&P 500. Comparatively, Nordic American Tanker has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Teekay Tankers 1 2 3 0 2.33
Nordic American Tanker 1 3 1 0 2.00

Teekay Tankers presently has a consensus target price of $1.65, suggesting a potential upside of 55.66%. Nordic American Tanker has a consensus target price of $2.30, suggesting a potential upside of 2.68%. Given Teekay Tankers’ stronger consensus rating and higher probable upside, research analysts plainly believe Teekay Tankers is more favorable than Nordic American Tanker.

Profitability

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

Net Margins Return on Equity Return on Assets
Teekay Tankers -13.20% -7.43% -3.43%
Nordic American Tanker -87.25% -13.97% -8.60%

Summary

Teekay Tankers beats Nordic American Tanker on 13 of the 14 factors compared between the two stocks.

Teekay Tankers Company Profile

Teekay Tankers Ltd. provides marine transportation services to oil industries in Bermuda and internationally. The company operates through two segments, Conventional Tanker and Ship-To-Ship Transfer. It is involved in the marine transportation of crude oil and refined petroleum products through the operation of its oil and product tankers. The company also provides ship-to-ship transfer services, including lightering and lightering support, consultancy, and LNG terminal management services. As of December 31, 2017, it operated a fleet of 52 owned conventional tankers, 4 conventional tankers related to capital leases, 1 in-chartered vessel, and 1 jointly-owned very large crude carrier; and 6 ship-to-ship support vessels. The company's vessels operated under fixed-rate time charter contracts with its customers. Teekay Tankers Ltd. was founded in 2007 and is based in Hamilton, Bermuda.

Nordic American Tanker Company Profile

Nordic American Tankers Limited, a tanker company, acquires and charters double-hull tankers in Bermuda and internationally. It operates a fleet of 33 Suezmax crude oil tankers. The company was founded in 1995 and is based in Hamilton, Bermuda.

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