Teekay Tankers (TNK) AI Stock Analysis

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Teekay Tankers

(NYSE:TNK)

81Outperform

Teekay Tankers scores well due to its robust financial performance, undervaluation, and positive technical indicators. Strong earnings call highlights, including profitability and strategic fleet renewal, support the score, though geopolitical uncertainties and market volatility pose potential risks. The overall outlook is positive, with sustainable growth prospects.

Positive Factors

Cash Flow

TCE rates remain well above Teekay’s $14,300/day cash breakeven level, providing robust cash generation.

Financial Performance

TNK remains in very strong financial shape with over $500 million of cash, no debt and continues to sell older ships.

Market Demand

OPEC+ announced a production boost which provides an uplift for Teekay Tankers by adding significantly more barrels to the market, supporting higher demand.

Negative Factors

Earnings

The recommendation rating for Teekay Tankers is set as UNDERPERFORM with a price objective of $39 due to lower than expected earnings and seasonal market rates.

Future Rate Concerns

The rating for TNK's shares has been lowered to Underperform from Neutral due to rising risks in international shipping and easing geopolitical disruptions.

Geopolitical Risks

Concerns remain about a potential influx of vessels if sanctions on Russia's fleet are lifted, impacting Teekay Tankers negatively.

Teekay Tankers (TNK) vs. S&P 500 (SPY)

Market Cap

$1.56B

Dividend Yield2.21%

Average Volume (3M)611.20K

Price to Earnings (P/E)4.9

Beta (1Y)0.48

Revenue Growth-21.27%

EPS Growth-34.25%

CountryUS

Employees2,330

SectorEnergy

Sector Strength51

IndustryOil & Gas Midstream

Share Statistics

EPS (TTM)1.21

Shares Outstanding29,756,186

10 Day Avg. Volume690,081

30 Day Avg. Volume611,197

Financial Highlights & Ratios

PEG Ratio-0.84

Price to Book (P/B)0.89

Price to Sales (P/S)0.00

P/FCF Ratio3.94

Enterprise Value/Market Cap0.71

Enterprise Value/Revenue0.22

Enterprise Value/Gross Profit2.82

Enterprise Value/Ebitda0.54

Forecast

1Y Price Target

$48.33

Price Target Upside6.69% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering3

Teekay Tankers Business Overview & Revenue Model

Company DescriptionTeekay Tankers Ltd. provides marine transportation services to oil industries in Bermuda and internationally. The company offers voyage and time charter services; and offshore ship-to-ship transfer services of commodities primarily crude oil and refined oil products, as well as liquid gases and various other products. It also provides tanker commercial and technical management services. As of December 31, 2021, the company owned and leased 48 double-hull oil tankers, time-chartered in two Aframax tankers, and one LR2 tanker. Teekay Tankers Ltd. was incorporated in 2007 and is headquartered in Hamilton, Canada.

How the Company Makes MoneyTeekay Tankers generates revenue primarily through the chartering of its fleet to oil companies and traders for the transportation of crude oil and refined petroleum products. The company's primary revenue streams include time-charter contracts, where vessels are hired for a fixed period at a set rate, and spot market voyages, where vessels are contracted for single voyages at prevailing market rates. Additionally, Teekay Tankers benefits from strategic partnerships and alliances within the industry, allowing for optimized fleet deployment and cost efficiencies. The company's earnings are significantly influenced by factors such as global oil demand, tanker supply dynamics, and fluctuations in freight rates.

Teekay Tankers Financial Statement Overview

Summary

Teekay Tankers has demonstrated strong financial performance across its income statement, balance sheet, and cash flow. The company maintains high profitability margins, impressive cash flow generation, and a solid balance sheet with low leverage, indicating a sustainable financial position and growth trajectory.

Income Statement

Very Positive

Teekay Tankers has shown impressive growth in revenue over the years, with recent figures indicating a slight decline in 2024. Despite this, the company maintained a high gross profit margin of 32.1% and net profit margin of 32.8% in 2024. The EBIT and EBITDA margins are similarly strong at 30.9% and 41.1%, respectively. The overall trend suggests robust profitability, with solid gains in net income and sustained revenue growth over the longer term.

Balance Sheet

Positive

Teekay Tankers exhibits a strong balance sheet characterized by a high equity ratio of 89.0% in 2024, reflecting financial stability and low leverage. The debt-to-equity ratio has significantly improved to 0.035, indicating effective debt management. Return on equity has also improved, standing at 22.98% in 2024. The company's financial position is quite stable with substantial shareholder equity and declining liabilities.

Cash Flow

Very Positive

The company has shown remarkable improvements in free cash flow, growing significantly year over year. The operating cash flow to net income ratio is strong at 1.17, indicating efficient cash generation relative to net income. Furthermore, the free cash flow to net income ratio stands at 0.98, showcasing effective capital management. The cash flow metrics suggest a highly efficient cash management system with strong liquidity.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.23B	1.36B	1.06B	542.37M	886.43M
	Gross Profit
394.30M	572.73M	290.65M	-58.01M	251.42M
	EBIT
380.14M	535.91M	255.95M	-194.09M	219.19M
	EBITDA
505.13M	648.42M	364.39M	-103.19M	258.24M
	Net Income Common Stockholders
403.67M	513.67M	229.09M	-242.37M	87.32M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
534.33M	365.94M	180.51M	50.57M	97.23M
	Total Assets
1.97B	1.87B	1.78B	1.62B	1.84B
	Total Debt
62.29M	215.91M	576.20M	654.03M	617.00M
	Net Debt
-449.60M	-150.03M	395.69M	603.46M	519.77M
	Total Liabilities
217.42M	347.71M	713.65M	780.34M	761.34M
	Stockholders Equity
1.76B	1.53B	1.07B	838.41M	1.08B
Cash Flow		Free Cash Flow
396.57M	615.87M	177.84M	-130.89M	331.92M
	Operating Cash Flow
471.91M	626.07M	193.26M	-109.44M	347.94M
	Investing Cash Flow
-5.11M	17.26M	51.22M	38.14M	74.52M
	Financing Cash Flow
-343.40M	-464.75M	-113.05M	24.08M	-416.10M

Teekay Tankers Technical Analysis

Technical Analysis Sentiment

Positive

Last Price45.30

Price Trends

50DMA

39.31

Positive

100DMA

40.05

Positive

200DMA

45.88

Negative

Market Momentum

MACD

1.90

Negative

RSI

62.91

Neutral

STOCH

63.23

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TNK, the sentiment is Positive. The current price of 45.3 is above the 20-day moving average (MA) of 41.78, above the 50-day MA of 39.31, and below the 200-day MA of 45.88, indicating a neutral trend. The MACD of 1.90 indicates Negative momentum. The RSI at 62.91 is Neutral, neither overbought nor oversold. The STOCH value of 63.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TNK.

Teekay Tankers Peers Comparison

Overall Rating

UnderperformOutperform

Sector (56)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DHT	84 Outperform	$1.78B	10.00	17.04%	8.57%	-5.32%	5.51%
TNK	81 Outperform	$1.56B	4.85	18.57%	2.21%	-21.27%	-34.25%
STNG	78 Outperform	$2.10B	2.98	24.68%	3.89%	-7.25%	31.85%
FRO	75 Outperform	$3.86B	7.79	21.46%	10.26%	13.77%	-24.50%
INSW	75 Outperform	$1.86B	5.82	17.57%	13.67%	-18.74%	-39.64%
GLP	57 Neutral	$1.64B	15.29	16.23%	6.02%	6.04%	18.28%
Sector *	56 Neutral	$7.06B	3.68	-4.87%	5.83%	0.28%	-51.94%

* Energy Sector Average

Performance Comparison

TNK

Teekay Tankers

45.34

-20.08

-30.69%

DHT

DHT Holdings

11.20

0.05

0.45%

FRO

Frontline

17.35

-6.98

-28.69%

GLP

Global Partners

48.17

9.07

23.20%

STNG

Scorpio Tankers

41.12

-35.91

-46.62%

INSW

International Seaways

38.00

-16.91

-30.80%

Teekay Tankers Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: -1.91%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call highlights strong financial performance, successful vessel sales, and a positive outlook for spot market rates and fleet renewal. However, these positives are tempered by uncertainties related to geopolitical tensions, economic conditions, and an aging global fleet, which could lead to market volatility.

Q1-2025 Updates

Positive Updates

Strong Financial Performance

Teekay Tankers reported GAAP net income of $76 million ($2.20 per share) and adjusted net income of $42 million ($1.21 per share) in Q1 2025. The company generated $65 million in free cash flow from operations.

Successful Vessel Sales

Teekay Tankers sold six vessels for total gross proceeds of approximately $183 million, realizing an expected accounting gain of $53 million.

Special Dividends Declared

Teekay Tankers declared a special dividend of $1 per share, alongside a regular quarterly dividend, totaling $1.25 per share.

Rising Spot Market Rates

Spot tanker market rates have strengthened significantly, with secured spot rates of $40,400 and $36,800 per day for Suezmax and Aframax LR2 fleets, respectively.

Fleet Renewal Strategy

Teekay Tankers is actively renewing its fleet by selling older vessels and acquiring more modern tonnage, including a modern LR2 vessel expected to be delivered soon.

Negative Updates

Geopolitical and Economic Uncertainties

The company faces uncertainties due to trade tariffs, geopolitical tensions, and potential economic downturns, which could impact tanker demand.

Aging Fleet Concerns

The global tanker fleet is aging, with an average age of 13.9 years, which could lead to increased scrapping and market rebalancing challenges.

Potential Market Volatility

The market faces potential volatility from geopolitical shifts, including U.S. sanctions and the ongoing war in Ukraine, which could affect tanker demand and pricing.

Company Guidance

During the Teekay Group's first quarter 2025 earnings call, several key metrics and strategic directions were highlighted. Teekay Tankers reported a GAAP net income of $76 million, or $2.20 per share, and an adjusted net income of $42 million, or $1.21 per share. The company generated approximately $65 million in free cash flow from operations during the quarter and announced the sale of six vessels for a total of $183 million, resulting in an expected accounting gain of $53 million. Teekay Tankers declared a regular quarterly dividend of $0.25 per share, alongside a special dividend of $1 per share, culminating in a total dividend payout of $1.25 per share. The firm has paid out $6.25 per share since updating its capital allocation plan in May 2023, with its book equity per share growing by over $21, or over $27 including dividends, to approximately $53 per share as of March 31, 2025. The tanker market is seeing strengthened spot rates, with secured rates of $40,400 per day for Suezmax and $36,800 per day for Aframax LR2 fleets. Teekay Corporation also declared a special dividend of $1 per share. Looking forward, Teekay expects continued strong cash flow generation, with a focus on fleet renewal through selling older vessels and acquiring modern tonnage, as well as leveraging market conditions for further 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.