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

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Teekay Offshore Partners 0 1 2 0 2.67
Teekay Tankers 1 2 3 0 2.33

Teekay Offshore Partners presently has a consensus target price of $3.17, indicating a potential upside of 24.18%. Teekay Tankers has a consensus target price of $1.65, indicating a potential upside of 61.76%. Given Teekay Tankers’ higher probable upside, analysts plainly believe Teekay Tankers is more favorable than Teekay Offshore Partners.

Valuation and Earnings

This table compares Teekay Offshore Partners and Teekay Tankers’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Teekay Offshore Partners $1.11 billion 0.94 -$303.20 million $0.01 255.00
Teekay Tankers $431.18 million 0.64 -$58.02 million ($0.11) -9.27

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

Profitability

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

Net Margins Return on Equity Return on Assets
Teekay Offshore Partners -36.83% 2.83% 0.49%
Teekay Tankers -13.20% -7.43% -3.43%

Insider & Institutional Ownership

76.2% of Teekay Offshore Partners shares are held by institutional investors. Comparatively, 30.0% of Teekay Tankers shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Teekay Offshore Partners pays an annual dividend of $0.04 per share and has a dividend yield of 1.6%. Teekay Tankers pays an annual dividend of $0.09 per share and has a dividend yield of 8.8%. Teekay Offshore Partners pays out 400.0% 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 -81.8% 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.

Risk & Volatility

Teekay Offshore Partners has a beta of 2.56, indicating that its share price is 156% more volatile than the S&P 500. Comparatively, Teekay Tankers has a beta of 1.84, indicating that its share price is 84% more volatile than the S&P 500.

Summary

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

Teekay Offshore Partners Company Profile

Teekay Offshore Partners L.P. provides marine transportation, oil production, storage, long-distance towing and offshore installation, and maintenance and safety services for the oil industry. It operates in six segments: Floating Production, Storage and Offloading (FPSO); Shuttle Tanker; Floating Storage and Off-Take (FSO); Unit for Maintenance and Safety (UMS); Towage; and Conventional Tanker. The company serves customers in offshore oil regions of the North Sea, Brazil, and the East Coast of Canada. As at December 31, 2017, it had a fleet of 37 shuttle tankers, 3 chartered-in vessels, 1 HiLoad dynamic positioning unit, 8 FPSO units, 6 FSO units, 10 long-distance towing and offshore installation vessels, 1 UMS, and 2 chartered-in conventional oil tankers. Teekay Offshore GP L.L.C. serves as the general partner of Teekay Offshore Partners L.P. The company was founded in 2006 and is based in Hamilton, Bermuda. Teekay Offshore Partners L.P. is a subsidiary of Brookfield TK TOLP L.P.

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.

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