Teekay Corp (NYSE:TK)
CAPS Rating:
The Company is a provider of international crude oil and petroleum product transportation services through our spot tanker fleet.
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The Company is a provider of international crude oil and petroleum product transportation services through our spot tanker fleet.
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Choose the best answer:
A)TK is too expensive
B)OSG (Overseas Shipholding) is too cheap
C)both A and B are true
Clues:
TK is a large fleet of oil tankers.
OSG is a large fleet of oil tankers.
TK and OSG have two important differences:
1)TK has more debt, and
2)TK's PE is 17 on steadily falling earnings (2004--$8.63/share; 2005--6.83/share; 2006--3.49 per share); vs 6 for OSG, also on falling earnings.
It's not that either company is in any trouble. Tanker rates are cyclical. Rates (and earnings) went way up, so everyone built a bunch of boats, so too much supply is coming on line, so rates (and earnings) are going way down. One day, they will go back up.
It's just that two similar companies should have similar PEs and most likely will, sooner or later.
hmmm you seem to take only past Earnings into account...and Discount Future Revenue/Earnings from TK..since you wrote this in April WHOM.." OMM"..did TK Buy.? I Believe and should be found correct when TK Reports this week..Earnings go UP...why More boats from the Newer fleet of OMM Acquisition.yeah Rates going down and I Followed omm from $3.00 until it was taken over..@ 29.50..This is cyclical..true.But I'll also bet Tk starts a BUYBACK to lower Float...hmm..You know why so many new buildings.?..and it wasn't..becuase of cyclical..nope..it was EU= European Union forcing all Tankers to be Double hulled by 2006,that forced all the Buildings..mostly.I don't own TK but would..or DSX,TBSI,SFI..or GMR..Take care.:}