Analyzing Ultrapar Participacoes (NYSE:UGP) and Scorpio Tankers (NYSE:STNG)

Scorpio Tankers (NYSE:STNG) and Ultrapar Participacoes (NYSE:UGP) are both mid-cap energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Dividends

Scorpio Tankers pays an annual dividend of $1.80 per share and has a dividend yield of 2.2%. Ultrapar Participacoes pays an annual dividend of $0.31 per share and has a dividend yield of 4.3%. Scorpio Tankers pays out 11.2% of its earnings in the form of a dividend. Ultrapar Participacoes pays out 50.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Scorpio Tankers has raised its dividend for 2 consecutive years.

Earnings and Valuation

This table compares Scorpio Tankers and Ultrapar Participacoes”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Scorpio Tankers	$1.22 billion	3.41	$344.29 million	$16.01	5.14
Ultrapar Participacoes	$25.51 billion	0.32	$439.48 million	$0.61	11.95

Ultrapar Participacoes has higher revenue and earnings than Scorpio Tankers. Scorpio Tankers is trading at a lower price-to-earnings ratio than Ultrapar Participacoes, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Scorpio Tankers and Ultrapar Participacoes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Scorpio Tankers	67.16%	16.43%	13.14%
Ultrapar Participacoes	2.28%	18.84%	7.17%

Insider & Institutional Ownership

54.6% of Scorpio Tankers shares are owned by institutional investors. Comparatively, 3.6% of Ultrapar Participacoes shares are owned by institutional investors. 7.3% of Scorpio Tankers shares are owned by company insiders. Comparatively, 1.8% of Ultrapar Participacoes shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk & Volatility

Scorpio Tankers has a beta of -0.22, meaning that its share price is 122% less volatile than the S&P 500. Comparatively, Ultrapar Participacoes has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Scorpio Tankers and Ultrapar Participacoes, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Scorpio Tankers	1	5	5	0	2.36
Ultrapar Participacoes	0	3	3	1	2.71

Scorpio Tankers presently has a consensus target price of $90.14, suggesting a potential upside of 9.49%. Ultrapar Participacoes has a consensus target price of $6.54, suggesting a potential downside of 10.29%. Given Scorpio Tankers’ higher probable upside, equities research analysts plainly believe Scorpio Tankers is more favorable than Ultrapar Participacoes.

Summary

Scorpio Tankers beats Ultrapar Participacoes on 10 of the 18 factors compared between the two stocks.

About Scorpio Tankers

Scorpio Tankers Inc., together with its subsidiaries, engages in the seaborne transportation of crude oi and refined petroleum products in the shipping markets worldwide. As of March 21, 2024, its fleet consisted of 110 owned and leases financed tanker, including 39 LR2, 57 MR, and 14 Handymax with a weighted average age of approximately 8.1 years. Scorpio Tankers Inc. was incorporated in 2009 and is headquartered in Monaco.

About Ultrapar Participacoes

Ultrapar Participações S.A., through its subsidiaries, operates in the energy and infrastructure business in Brazil. The company distributes liquefied petroleum gas to residential, commercial, and industrial consumers, in addition to renewable electricity and compressed natural gas. It also operates in the distribution and marketing of gasoline, ethanol, diesel, fuel oil, kerosene, natural gas for vehicles, and lubricants; and holds AmPm convenience stores and provides JetOil lubricant services. In addition, the company operates liquid bulk storage terminals. Further, it offers digital payments services, combining the abastece aí app and the loyalty program Km de Vantagens. It also exports its products and services to customers in Europe, Singapore, the United States, Canada, other Latin American countries, and internationally. The company was founded in 1937 and is headquartered in São Paulo, Brazil.