Scorpio Tankers (STNG): Valuation Check After LR2 Fleet Renewal and Newbuild Orders

Scorpio Tankers (STNG) is shaking up its fleet again, agreeing to sell two 2016 built LR2 product tankers while ordering two scrubber fitted LR2 newbuilds that better match tightening rules and evolving fuel economics.

See our latest analysis for Scorpio Tankers.

That kind of fleet refresh is landing just as sentiment has cooled a bit, with a 30 day share price return of negative 16.78 percent and a year to date share price return of 3.60 percent. However, the 5 year total shareholder return of 408.09 percent shows the longer term momentum story is still very much intact.

If Scorpio Tankers has you thinking about where the next big shipping like run might emerge, it could be worth scanning fast growing stocks with high insider ownership for other under the radar compounders.

With earnings growth flattening, but the stock still trading at a steep discount to analyst targets and its implied intrinsic value, is Scorpio Tankers quietly undervalued, or is the market already pricing in its next leg of growth?

Most Popular Narrative Narrative: 30% Undervalued

Compared with Scorpio Tankers' last close at $51.83, the most widely followed narrative argues for a much higher fair value anchored in steady cash generation.

Industry wide fleet aging, together with stricter environmental regulations and limited new ordering activity, is constraining effective supply growth. Scorpio's young, fuel efficient fleet stands to capture market share and command premium rates as older vessels lose utilization, thereby supporting net margins and sustained earnings growth.

Read the complete narrative.

Curious how modest growth, resilient margins and a richer future earnings multiple can still justify a punchy fair value upgrade? The full narrative unpacks the assumptions driving that spread between today’s price and tomorrow’s projected worth, and shows how cash flows are discounted back to land on that figure.

Result: Fair Value of $74 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, longer term oil demand uncertainty and the risk of overordering in the product tanker segment could quickly compress day rates and Scorpio’s margins.

Find out about the key risks to this Scorpio Tankers narrative.

Build Your Own Scorpio Tankers Narrative

If you see the story differently or want to stress test the numbers yourself, build a fresh thesis in just a few minutes with Do it your way.

A great starting point for your Scorpio Tankers research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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