Scorpio Tankers Inc (STNG): A Deep Dive into Its Performance Potential
Long-established in the Oil & Gas industry, Scorpio Tankers Inc (NYSE:STNG) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 5.04%, juxtaposed with a three-month change of 11.14%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Scorpio Tankers Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 5/10
Profitability rank: 5/10
Growth rank: 6/10
GF Value rank: 1/10
Momentum rank: 2/10
Based on the above method, GuruFocus assigned Scorpio Tankers Inc the GF Score of 59 out of 100, which signals poor future outperformance potential.
Scorpio Tankers Inc: A Snapshot
Scorpio Tankers Inc is a provider of marine transportation of petroleum products. It owns, lease finances or bareboat charters-in 113 product tankers namely 39 LR2 tankers, 60 MR tankers and 14 Handymax tankers. The company's fleet of tankers is the largest, most eco-friendly and newest fleet on the water hauling clean petroleum products. With a market cap of $2.75 billion and sales of $1.70 billion, the company has an operating margin of 59.
Financial Strength Analysis
Scorpio Tankers Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 2.15, which is below the safe threshold of 2.99. Although this does not imply immediate danger of financial distress, the stock may face some financial struggles if the Altman Z-score drops below 1.81. Additionally, the company's low cash-to-debt ratio at 0.17 indicates a struggle in handling existing debt levels.
Profitability Analysis
Scorpio Tankers Inc's low Profitability rank can also raise warning signals. This suggests that the company's profitability may be under pressure, which could impact its ability to generate returns for investors.
Conclusion
Considering the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While Scorpio Tankers Inc has a commendable history in the Oil & Gas industry, its current financial indicators suggest that it may struggle to maintain its past performance. Investors should therefore exercise caution and conduct further research before making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
