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

Volatility & Risk

Teekay Corporation has a beta of 1.66, suggesting that its share price is 66% more volatile than the S&P 500. Comparatively, KNOT Offshore Partners has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500.

Valuation and Earnings

This table compares Teekay Corporation and KNOT Offshore Partners’ revenue, earnings per share (EPS) 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) -6.38
KNOT Offshore Partners $184.55 million 3.70 $140.66 million $2.39 9.63

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.

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 9.0%. 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 increased its dividend for 2 consecutive years and KNOT Offshore Partners has increased its dividend for 3 consecutive years. KNOT Offshore Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend 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%

Insider & Institutional Ownership

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Teekay Corporation and KNOT Offshore Partners, as provided by MarketBeat.com.

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 price target of $5.33, indicating a potential downside of 41.52%. Given Teekay Corporation’s higher possible upside, analysts clearly believe Teekay Corporation is more favorable than KNOT Offshore Partners.

Summary

KNOT Offshore Partners beats Teekay Corporation on 8 of the 14 factors compared between the two stocks.

Teekay Corporation Company Profile

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.

KNOT Offshore Partners Company Profile

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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