Financial Review: KNOT Offshore Partners (KNOP) and Teekay Tankers (TNK)

KNOT Offshore Partners (NYSE: KNOP) and Teekay Tankers (NYSE:TNK) are both small-cap transportation companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, analyst recommendations, dividends, profitability and risk.

Dividends

KNOT Offshore Partners pays an annual dividend of $2.08 per share and has a dividend yield of 10.2%. Teekay Tankers pays an annual dividend of $0.12 per share and has a dividend yield of 10.5%. KNOT Offshore Partners pays out 92.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Teekay Tankers pays out -109.1% of its earnings in the form of a dividend. Teekay Tankers is clearly the better dividend stock, given its higher yield and lower payout ratio.



Analyst Recommendations

This is a breakdown of recent recommendations and price targets for KNOT Offshore Partners and Teekay Tankers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KNOT Offshore Partners 0 1 0 0 2.00
Teekay Tankers 1 1 2 0 2.25

KNOT Offshore Partners presently has a consensus price target of $21.00, indicating a potential upside of 3.45%. Teekay Tankers has a consensus price target of $1.87, indicating a potential upside of 63.74%. Given Teekay Tankers’ stronger consensus rating and higher probable upside, analysts clearly believe Teekay Tankers is more favorable than KNOT Offshore Partners.

Risk & Volatility

KNOT Offshore Partners has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Teekay Tankers has a beta of 2.02, indicating that its share price is 102% more volatile than the S&P 500.

Earnings and Valuation

This table compares KNOT Offshore Partners and Teekay Tankers’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KNOT Offshore Partners $219.20 million 3.03 $68.06 million $2.26 8.98
Teekay Tankers $431.18 million 0.47 -$58.02 million ($0.11) -10.36

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

Profitability

This table compares KNOT Offshore Partners and Teekay Tankers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KNOT Offshore Partners 31.05% 10.92% 4.16%
Teekay Tankers -13.78% -2.16% -1.05%

Insider and Institutional Ownership

45.1% of KNOT Offshore Partners shares are owned by institutional investors. Comparatively, 47.6% of Teekay Tankers shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Teekay Tankers beats KNOT Offshore Partners on 8 of the 14 factors compared between the two stocks.

About KNOT Offshore Partners

KNOT Offshore Partners LP owns and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides crude oil loading, transportation, and storage services under time charters and bareboat charters. As of June 30, 2017, it had a fleet of 13 shuttle tankers. KNOT Offshore Partners GP LLC serves as the general partner of the company. The company was founded in 2013 and is headquartered in Aberdeen, the United Kingdom.

About Teekay Tankers

Teekay Tankers Ltd. engages in the marine transportation of crude oil and refined petroleum products through the operation of its oil and product tankers worldwide. The company also provides ship-to-ship transfer services, including lightering and lightering support, consultancy, and LNG terminal management services. As of December 31, 2016, its fleet consisted of 43 owned conventional tankers, 7 in-chartered vessels, and 1 jointly-owned very large crude carrier; and 7 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.

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