Analyzing Galp Energia SGPS (OTCMKTS:GLPEY) and Torm (NASDAQ:TRMD)

Galp Energia SGPS (OTCMKTS:GLPEY) and Torm (NASDAQ:TRMD) are both energy companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Institutional & Insider Ownership

73.9% of Torm shares are owned by institutional investors. 0.4% of Torm shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Galp Energia SGPS and Torm, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Galp Energia SGPS	0	6	3	0	2.33
Torm	0	1	2	1	3.00

Torm has a consensus target price of $38.00, suggesting a potential downside of 7.14%. Given Torm’s stronger consensus rating and higher possible upside, analysts plainly believe Torm is more favorable than Galp Energia SGPS.

Dividends

Galp Energia SGPS pays an annual dividend of $0.18 per share and has a dividend yield of 1.5%. Torm pays an annual dividend of $7.00 per share and has a dividend yield of 17.1%. Galp Energia SGPS pays out 20.9% of its earnings in the form of a dividend. Torm pays out 115.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings & Valuation

This table compares Galp Energia SGPS and Torm”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Galp Energia SGPS	$22.89 billion	0.73	$1.27 billion	$0.86	14.40
Torm	$1.76 billion	2.37	$285.30 million	$6.07	6.74

Galp Energia SGPS has higher revenue and earnings than Torm. Torm is trading at a lower price-to-earnings ratio than Galp Energia SGPS, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Galp Energia SGPS and Torm’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Galp Energia SGPS	5.43%	30.13%	10.03%
Torm	35.51%	27.24%	17.96%

Summary

Torm beats Galp Energia SGPS on 10 of the 16 factors compared between the two stocks.

About Galp Energia SGPS

Galp Energia, SGPS, S.A. operates as an integrated energy operator in Portugal and internationally. The company operates through four segments: Upstream, Industrial & Midstream, Commercial, and Renewables and New Business. The Upstream segment engages in the exploration, development, and production of hydrocarbons primarily in Brazil, Mozambique, Namibia, and Angola. The Industrial & Midstream segment owns refineries in Portugal, as well as is involved in activities related to energy management of oil products, gas, and electricity. This segment provides storage and transportation infrastructure for oil and gas products, as well as engages in the sale of electricity to the grid in Portugal and Spain. The Commercial segment is involved in the areas of retail to final business-to-business and business to consumer customers of oil, gas, and electricity. The Renewables and New Business segment is involved in the development of solar and wind power generation projects in Portugal and Spain. In addition, it produces lithium-ion batteries, hydrogen, and biofuels; and operates service stations. Further, the company engages in the reinsurance business. The company was formerly known as Galp Petróleos e Gás de Portugal, SGPS, S.A. and changed its name to Galp Energia, SGPS, S.A. in September 2000. Galp Energia, SGPS, S.A. was incorporated in 1999 and is headquartered in Lisbon, Portugal.

About Torm

TORM plc, a shipping company, owns and operates a fleet of product tankers in the United Kingdom. It operates in two operating segments, Tanker and Marine Exhaust. The Tanker segment transports refined oil products, such as gasoline, jet fuel, kerosene, naphtha, and gas oil, as well as dirty petroleum products, including fuel oil. The Marine Exhaust segment engages in developing and producing advanced and green marine equipment. TORM plc was founded in 1889 and is based in London, the United Kingdom.