Scorpio Tankers (STNG) AI Stock Analysis

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Scorpio Tankers

(NYSE:STNG)

72Outperform

Scorpio Tankers benefits from strong financial performance and attractive valuation with a low P/E ratio and solid dividend yield. However, the technical indicators suggest bearish momentum, which could pose short-term risks. The company is strategically positioned with strong liquidity and operational efficiency, but geopolitical uncertainties remain a challenge. Overall, the stock presents a balanced risk-reward profile, driven by its financial health and valuation appeal.

Positive Factors

Debt Management

Scorpio Tankers has paid down ~$794M of debt YTD, which puts STNG debt to steel value roughly in line with the fleet's scrap value.

Market Positioning

Scorpio Tankers is well positioned for a global recovery in refined crude oil consumption with an attractive asset base in an improving market environment.

Shareholder Value

Scorpio Tankers repurchased ~3.4M shares at an average price of $73.34, bringing repurchases to ~4M shares which shows strong management action in enhancing shareholder value.

Negative Factors

Operational Challenges

Vessel operating expenses are slightly higher due to increased charters moving around the Cape of Good Hope, weather induced repairs, and larger than expected days in dry dock.

Rate Decline

Fleet time-charter equivalent rates were down 33% year-year for 4Q24 as crude tanker rates fell due to an oversupply of product in Europe.

Revenue Performance

Scorpio Tankers posted 4Q24 revenues of $204 million, down 39% year-year.

Scorpio Tankers (STNG) vs. S&P 500 (SPY)

Market Cap

$1.71B

Dividend Yield4.66%

Average Volume (3M)1.13M

Price to Earnings (P/E)2.5

Beta (1Y)0.49

Revenue Growth-7.25%

EPS Growth31.85%

CountryUS

Employees24

SectorEnergy

Sector Strength45

IndustryOil & Gas Midstream

Share Statistics

EPS (TTM)13.63

Shares Outstanding49,916,542

10 Day Avg. Volume1,326,459

30 Day Avg. Volume1,126,876

Financial Highlights & Ratios

PEG Ratio0.08

Price to Book (P/B)N/A

Price to Sales (P/S)4.73

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$60.50

Price Target Upside77.26% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering4

Scorpio Tankers Business Overview & Revenue Model

Company DescriptionScorpio Tankers Inc., together with its subsidiaries, engages in the seaborne transportation of refined petroleum products in the shipping markets worldwide. As of March 18, 2022, the company's fleet consisted of 124 owned, finance leased, or bareboat chartered-in tankers, including 42 LR2, 6 LR1, 62 MR, and 14 Handymax with a weighted average age of approximately 6.2 years. Scorpio Tankers Inc. was incorporated in 2009 and is based in Monaco.

How the Company Makes MoneyScorpio Tankers makes money primarily through the chartering of its tanker vessels to customers who need to transport refined petroleum products. The company's revenue model is based on time charters and spot charters. In time charters, Scorpio Tankers leases its vessels to customers for a fixed period, providing predictable and stable revenue streams. In spot charters, the company leases vessels for single voyages based on current market rates, which can lead to variable earnings depending on market conditions. Key revenue streams are derived from these charter agreements and are influenced by factors such as global oil demand, freight rates, and the availability of tanker capacity. Strategic partnerships with oil companies, traders, and other shipping firms also contribute to Scorpio Tankers' earnings, enhancing its market presence and operational efficiency.

Scorpio Tankers Financial Statement Overview

Summary

Scorpio Tankers has shown a strong improvement in profitability and cash flow management, with a significant increase in net profit and reduced debt levels. However, declining revenues and decreasing total assets are concerns that need to be addressed for sustained growth.

Income Statement

Positive

Scorpio Tankers has demonstrated a strong improvement in profitability over the years, with a significant increase in net profit from negative values in earlier years to substantial positive figures in recent periods. The company exhibits robust EBIT and EBITDA margins, indicative of effective cost management and operational efficiency. However, recent revenue has seen a decline from 2022 to 2024, which could be a concern if the trend continues.

Balance Sheet

Positive

The balance sheet shows a healthy equity position with a debt-to-equity ratio that has improved over the years, indicating reduced leverage and financial risk. The equity ratio is strong, suggesting a solid capital structure. However, the total assets have been decreasing, which may limit future growth if not addressed.

Cash Flow

Very Positive

Scorpio Tankers has shown strong cash flow management, with rising operating cash flows and free cash flows. The free cash flow to net income ratio is high, indicating efficient conversion of earnings into cash. The company has also successfully reduced capital expenditures, contributing to better cash flow sustainability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.24B	1.34B	1.56B	540.79M	915.89M
	Gross Profit
894.43M	809.89M	939.62M	-37.76M	328.37M
	EBIT
764.60M	705.15M	797.71M	-84.83M	245.33M
	EBITDA
773.38M	916.11M	1.00B	146.32M	490.86M
	Net Income Common Stockholders
668.77M	546.90M	637.25M	-380.60M	-62.35M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
406.74M	355.55M	376.87M	230.41M	187.51M
	Total Assets
3.83B	4.23B	4.56B	5.01B	5.16B
	Total Debt
861.97M	1.59B	1.93B	3.12B	3.05B
	Net Debt
529.39M	1.23B	1.56B	2.89B	2.86B
	Total Liabilities
967.77M	1.67B	2.05B	3.18B	3.09B
	Stockholders Equity
2.87B	2.55B	2.51B	1.84B	2.07B
Cash Flow		Free Cash Flow
825.18M	842.40M	734.85M	26.20M	244.90M
	Operating Cash Flow
825.18M	865.49M	769.33M	73.30M	419.38M
	Investing Cash Flow
307.99M	43.61M	571.96M	-52.28M	-174.48M
	Financing Cash Flow
-1.16B	-930.42M	-1.19B	21.88M	-259.70M

Scorpio Tankers Technical Analysis

Technical Analysis Sentiment

Negative

Last Price34.13

Price Trends

50DMA

39.72

Negative

100DMA

44.58

Negative

200DMA

56.29

Negative

Market Momentum

MACD

-1.80

Positive

RSI

41.21

Neutral

STOCH

54.89

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STNG, the sentiment is Negative. The current price of 34.13 is below the 20-day moving average (MA) of 36.50, below the 50-day MA of 39.72, and below the 200-day MA of 56.29, indicating a bearish trend. The MACD of -1.80 indicates Positive momentum. The RSI at 41.21 is Neutral, neither overbought nor oversold. The STOCH value of 54.89 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STNG.

Scorpio Tankers Peers Comparison

Overall Rating

UnderperformOutperform

Sector (55)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TNK	77 Outperform	$1.33B	3.32	23.93%	2.59%	-16.70%	-24.06%
TK	74 Outperform	$537.16M	4.41	18.55%	―	-16.70%	-8.04%
LPG	74 Outperform	$865.93M	5.02	15.72%	―	-24.25%	-48.08%
STNG	72 Outperform	$1.71B	2.49	24.68%	4.66%	-7.25%	31.85%
DMLP	62 Neutral	$1.32B	13.04	32.48%	11.57%	-1.39%	-23.38%
Sector *	55 Neutral	$7.08B	3.69	-5.71%	6.15%	-1.38%	-53.90%

* Energy Sector Average

Performance Comparison

STNG

Scorpio Tankers

34.13

-34.68

-50.40%

DMLP

Dorchester Minerals

28.05

-2.38

-7.82%

Teekay

6.29

0.05

0.80%

TNK

Teekay Tankers

38.31

-16.26

-29.80%

LPG

Dorian LPG

19.67

-16.25

-45.24%

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Scorpio Tankers Earnings Call Summary

Earnings Call Date: Feb 12, 2025 | % Change Since: -27.97% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Neutral

Scorpio Tankers reported a strong financial performance with significant debt reduction and shareholder returns. However, geopolitical uncertainties and market volatility pose challenges. Operational efficiencies and strategic investments provide a positive outlook.

Highlights

Strong Financial Performance

Scorpio Tankers generated $842 million in adjusted EBITDA and $513 million in adjusted net income for the full year 2024.

Debt Reduction and Liquidity

The company reduced its indebtedness by $740 million, resulting in a liquidity position of over $1.3 billion.

Shareholder Returns

Returned $419 million to shareholders through $336 million in share repurchases and $84 million in dividends.

Operational Efficiency

Completed special surveys and dry docking for fifty-four vessels, enhancing operational efficiency.

Strategic Investments

Increased stake in crude tanker company DHT, viewing it as an attractive investment.

Lowlights

Geopolitical Uncertainty

Increased uncertainty due to geopolitical developments, including recent sanctions and tariff changes.

Market Volatility

Volatile market conditions have impacted rates, with current rates being lower than the previous year.

Red Sea Bypass Challenges

Continued bypass of the Suez Canal due to geopolitical tensions in the Red Sea region.

Handy Size Fleet Constraints

Lower earnings potential for handy size vessels due to dry docking and absence from Russian markets.

Company Guidance

During the Scorpio Tankers Fourth Quarter 2024 Conference Call, the company provided comprehensive guidance on various financial and operational metrics. For the fourth quarter, Scorpio Tankers generated $105 million in adjusted EBITDA and $30 million in adjusted net income, while for the full year 2024, they achieved $842 million in adjusted EBITDA and $513 million in adjusted net income. The company significantly reduced its indebtedness by $740 million and improved its liquidity position to $1.3 billion, including $531 million in cash and $788 million in undrawn revolving capacity. Operationally, they completed special surveys and dry docking of fifty-four vessels, optimizing fleet efficiency and reducing repositioning costs. Additionally, Scorpio Tankers sold twelve older vessels, enhancing their fleet's age profile. The company returned $419 million to shareholders, split between $336 million in share repurchases and $84 million in dividends. Scorpio Tankers remains focused on maintaining financial flexibility, with low leverage and strong liquidity, and is strategically poised for future opportunities.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.