Are Teekay Tankers’ Valuation Multiples Attractive?
The EV-to-EBITDA for Teekay Tankers (TNK) has been falling since January 2014. In August 2015, the multiple touched one of its all-time lows.
The crude (DBO) tanker industry has experienced robust tanker rates this year. The rates are almost double the numbers recorded last year.
Teekay Tankers (TNK)—along with Frontline, Tsakos Energy Navigation, and DHT Holdings—operates its vessels either in the spot market or time charter market.
Teekay Tankers is establishing itself as a global player in the ship-to-ship business. It acquired 100% interest in SPT for $45.5 million.
One day before the 2Q15 earnings were released, Teekay Tankers announced its acquisition of 12 modern Suezmax tankers from Principle Maritime.
Teekay Tankers’ vessel operating expenses for 2Q15 were $26.2 million—compared to $22.44 million in the last quarter and $22.58 million in 2Q14.
Crude tanker rates have been falling since the end of July. In the first week of August, they were around $30,000 for Suezmax vessels.
Teekay Tankers’ 2Q15 revenue, at $113 million, was higher than analysts’ estimates of $107.6 million. However, the company failed to meet EBITDA estimates.
Steel demand indicators in the US are quite strong if you exclude the falling steel demand from the energy sector.
US steel imports have now fallen on a yearly basis for four consecutive months.
One of the biggest challenges that the US steel industry currently faces relates to the surge in steel imports.
Steel prices have come down steeply. Among other factors, falling raw material prices have played a crucial role in the correction in steel prices.
The rising differential between steel prices in China and other countries acts as an additional incentive for Chinese steel exporters.
Chinese steel exports are increasing over a high baseline year. Last year, China exported a record 93 million tons of steel.
Though it might be early to comment, China’s real estate indicators could be bottoming out. Any uptick in Chinese real estate industry would benefit the global steel industry.
In July, Chinese steel production fell 4.6% YoY. This is the biggest percentage decline in Chinese steel production in about the last five years.
Global steel production has fallen on a year-over-year (or YoY) basis for seven consecutive months. In July, the production fell 2.94% YoY, the steepest decline in the last several months.
As of August 22, US steel production fell 7.8% compared to the corresponding period last year.
Strong steel demand indicators in the US market have helped steel companies’ shipments in 2Q15.
Metal stocks have seen increased volatility over the last few trading sessions. Share prices of most steel companies are approaching their 52-week lows.
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