Scorpio Tankers Inc. (STNG) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Scorpio Tankers (STNG)? Shares have been on the move with the stock up 11.2% over the past month. The stock hit a new 52-week high of $55.19 in the previous session. Scorpio Tankers has gained 328.4% since the start of the year compared to the -12.1% move for the Zacks Transportation sector and the 34.1% return for the Zacks Transportation - Shipping industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 1, 2022, Scorpio Tankers reported EPS of $4.29 versus consensus estimate of $3.81 while it beat the consensus revenue estimate by 9.18%.
For the current fiscal year, Scorpio Tankers is expected to post earnings of $11.14 per share on $1.44 billion in revenues. This represents a 367.15% change in EPS on a 167.79% change in revenues. For the next fiscal year, the company is expected to earn $8.53 per share on $1.37 billion in revenues. This represents a year-over-year change of -23.43% and -4.69%, respectively.
Valuation Metrics
Scorpio Tankers may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Scorpio Tankers has a Value Score of C. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 4.9X current fiscal year EPS estimates, which is a premium to the peer industry average of 3.8X. On a trailing cash flow basis, the stock currently trades at 75.2X versus its peer group's average of 2.5X. Additionally, the stock has a PEG ratio of 0.11. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Scorpio Tankers currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Scorpio Tankers passes the test. Thus, it seems as though Scorpio Tankers shares could still be poised for more gains ahead.
How Does STNG Stack Up to the Competition?
Shares of STNG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ardmore Shipping Corporation (ASC). ASC has a Zacks Rank of # 1 (Strong Buy) and a Value Score of D, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Ardmore Shipping Corporation beat our consensus estimate by 10%, and for the current fiscal year, ASC is expected to post earnings of $1.97 per share on revenue of $279.29 million.
Shares of Ardmore Shipping Corporation have gained 9.1% over the past month, and currently trade at a forward P/E of 4.07X and a P/CF of 181.1X.
The Transportation - Shipping industry is in the top 50% of all the industries we have in our universe, so it looks like there are some nice tailwinds for STNG and ASC, even beyond their own solid fundamental situation.
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Scorpio Tankers Inc. (STNG) : Free Stock Analysis Report
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