Should Swapping Mid-Life LR2s for Costlier Newbuilds Require Action From Scorpio Tankers (STNG) Investors?

• Earlier this month, Scorpio Tankers said it agreed to sell two 2016-built LR2 product tankers, STI Goal and STI Gallantry, for about US$52.3 million each by early 2026, while ordering two scrubber-fitted LR2 newbuildings at roughly US$70.8 million apiece for delivery in the third quarter of 2027.
• The transactions not only refresh the fleet ahead of costly 10-year surveys but also reshape capital commitments by replacing leased, aging vessels with higher-priced, future-efficient ships.
• Next, we’ll assess how swapping mid-life LR2 tankers for scrubber-fitted newbuildings could influence Scorpio Tankers’ cash generation and fleet-focused investment narrative.

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Scorpio Tankers Investment Narrative Recap

To own Scorpio Tankers, you have to believe that longer-haul refined product trades and a relatively constrained tanker supply can continue to support cash generation, even as earnings forecasts soften. The LR2 sale and newbuild deals are incremental to this thesis rather than a near term catalyst, and they do not fundamentally change the key short term watchpoints around spot rate volatility and the risk of future overcapacity from a growing product tanker order book.

The most relevant prior update is Scorpio’s November 2025 decision to sell four 2014-built MR tankers and order four scrubber-fitted MR newbuilds, which mirrors the LR2 refresh and underlines a broader fleet renewal push. Together, these moves keep the fleet younger and more compliant just as analysts flag that earnings could ease, which may matter if new vessel deliveries across the sector start to weigh on day rates and cash margins.

Yet investors should also be aware that if current product tanker ordering persists, the risk of future overcapacity and weaker day rates...

Read the full narrative on Scorpio Tankers (it's free!)

Scorpio Tankers' narrative projects $972.2 million revenue and $302.6 million earnings by 2028. This requires 2.0% yearly revenue growth and an earnings decrease of $56.4 million from $359.0 million today.

Uncover how Scorpio Tankers' forecasts yield a $74.00 fair value, a 45% upside to its current price.

Exploring Other Perspectives

Four members of the Simply Wall St Community currently see fair value anywhere between US$23.90 and US$304.37, underlining how far apart expectations can be. Against that spread, analysts’ focus on a sizeable product tanker order book and the risk of future overcapacity gives you a different lens on how Scorpio Tankers’ earnings power could evolve over time.

Explore 4 other fair value estimates on Scorpio Tankers - why the stock might be worth less than half the current price!

Build Your Own Scorpio Tankers Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• 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.
• Our free Scorpio Tankers research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Scorpio Tankers' overall financial health at a glance.

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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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