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

Dividends

Teekay Corporation pays an annual dividend of $0.22 per share and has a dividend yield of 2.4%. KNOT Offshore Partners pays an annual dividend of $2.08 per share and has a dividend yield of 8.9%. Teekay Corporation pays out -15.4% of its earnings in the form of a dividend. KNOT Offshore Partners pays out 87.0% 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 Corporation has raised its dividend for 3 consecutive years and KNOT Offshore Partners has raised its dividend for 2 consecutive years.

Earnings and Valuation

This table compares Teekay Corporation and KNOT Offshore Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Teekay Corporation $2.16 billion 0.36 $843.75 million ($1.43) -6.31
KNOT Offshore Partners $184.55 million 3.84 $140.66 million $2.39 9.81

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

Analyst Ratings

This is a summary of recent recommendations for Teekay Corporation and KNOT Offshore Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Teekay Corporation 1 3 0 0 1.75
KNOT Offshore Partners 0 0 0 0 N/A

Teekay Corporation presently has a consensus target price of $5.33, suggesting a potential downside of 40.87%. Given Teekay Corporation’s higher probable upside, equities analysts plainly believe Teekay Corporation is more favorable than KNOT Offshore Partners.

Institutional & Insider Ownership

31.5% of Teekay Corporation shares are owned by institutional investors. Comparatively, 50.1% of KNOT Offshore Partners shares are owned by institutional investors. 2.4% of Teekay Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Teekay Corporation -5.66% -2.82% -0.87%
KNOT Offshore Partners 35.75% 10.26% 4.31%

Volatility & Risk

Teekay Corporation has a beta of 1.68, suggesting that its stock price is 68% more volatile than the S&P 500. Comparatively, KNOT Offshore Partners has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.

About Teekay Corporation

Teekay Corporation (Teekay) is a provider of crude oil and gas marine transportation services. The Company also offers offshore oil production, storage and offloading services, primarily under long-term, fixed-rate contracts. The Company is engaged in the liquefied natural gas (LNG) and liquefied petroleum gas (LPG) shipping sectors, as well as in the operations in the offshore production, storage and transportation sector. It is also involved in the conventional tanker business. Teekay provides a set of marine services to the oil and gas companies. The Company has four lines of business: offshore logistics (shuttle tankers, the HiLoad DP unit, floating storage and off-take (FSO) units, units for maintenance and safety (UMS), and long-distance towing and offshore installation vessels), offshore production (floating production, storage and offloading (FPSO) units), liquefied gas carriers and conventional tankers.

About KNOT Offshore Partners

KNOT Offshore Partners LP (KNOT Offshore Partners or the Partnership), owns, operates and acquires shuttle tankers under long-term charters. The Partnership’s vessels in its fleet are chartered to Statoil ASA (Statoil), Petrobras Transporte S.A. (Transpetro), Repsol Sinopec Brasil, S.A. (Repsol), Royal Dutch Shell plc, ExxonMobil, and Eni Trading and Shipping S.p.A. (ENI). As of March 17, 2017, the Company had a fleet of 12 shuttle tankers. Its shuttle tankers include Fortaleza Knutsen, Recife Knutsen, Bodil Knutsen and Dan Cisne. KNOT Offshore Partners GP LLC is the general partner of the Partnership. It is engaged in the loading, transportation and storage of the crude oil using the vessels in its fleet. It provides all of these services under time charters and bareboat charters. As of December 31, 2016, eight of its shuttle tankers were chartered under time charters and four of its shuttle tankers were chartered under bareboat charters.

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