Scorpio Tankers Inc. (STNG): what the price assumes

boothcheck covers Scorpio Tankers Inc. (STNG) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-11.

Generated: 2026-09-27 · Source: https://boothcheck.com/report/STNG

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7.9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: n/a

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.4%); the inversion above states its own rate.

Per-Model Detail (n=15)

Solvency

Bullet Takeaways

• Scorpio Tankers is a pure-play product tanker owner trading at about 1.15x book value with more cash than debt, while its board has replenished the securities repurchase program to $500 million, a large commitment against a $3.7 billion market cap.
• The core risk is the one the trailing numbers display: spot-rate cyclicality took trailing earnings down to $1.85 per share across the 2025 trough before rates re-surged in 2026, and a rate rollover re-runs that math with no contract backlog to cushion it.
• The second-quarter report is the next checkpoint, with the company having already fixed 88 percent of LR2 days near $80,000 per day and 90 percent of MR days near $53,000, and $300 million of vessel sales due to close in the quarter.

Bull Case

The valuation methods disagree about this stock in an unusually revealing way. Every lens that capitalizes the trailing year, book returns, normalized earnings power, peer multiples, reads the price as rich, because the trailing year was a trough: returns on equity ran below 3 percent and trailing earnings per share came in at $1.85. Only the cash-flow lens reaches today's $79.34. That split is not noise; it is the signature of a cyclical priced mid-inflection, where the backward-looking frames capitalize the bottom of the rate cycle just as the actual rate environment leaves it behind. Read against operating income, the price sits below what even a 5 percent annual decline path would warrant, which is to say the market is still pricing erosion while the business books expansion.

The expansion is not hypothetical. First-quarter 2026 net income came in at $216.3 million, or $4.58 basic earnings per share, more than double the entire trailing-year figure in a single quarter. For the second quarter, the company has already fixed 88 percent of its LR2 days at roughly $80,000 per day and 90 percent of MR days near $53,000, rates near the top of the historical range for product tankers. At those fixtures, cash arrives faster than the trailing statements can absorb it.

Management's capital allocation converts that cash into per-share value with unusual discipline. The board replenished the repurchase program to $500 million, roughly an eighth of the market cap, extending a record that has already shrunk the share count about 4 percent a year over the past four years. At the same time it agreed to sell six 2014-built vessels, three LR2s for $195 million and three MRs for $105 million, prices that validate the fleet's carrying value while trimming the oldest tonnage. Buying back stock near 1.15x book while selling ships at firm prices is the rare shipping combination where both sides of the trade favor the remaining holder, and the balance sheet (more cash than debt, $752 million of liquid assets) means none of it is leveraged bravado.

Bear Case

The competition that matters in product tankers is not another company's better product. It is every other owner's newbuild order, and the industry has never once shown restraint at the top of a rate cycle. Scorpio's LR2s earning near $80,000 per day are a broadcast invitation: the same fixtures that make the bull case fund competitors' orderbooks at Korean and Chinese yards, and vessels ordered into strength deliver into whatever market exists two years later. There is no moat here, no switching cost, no brand. A charterer takes the cheapest compliant ship, which means Scorpio is a price-taker in both directions, and the direction reverses without notice.

The trailing year is the bear case made flesh. Across the 2025 trough, earnings per share fell to $1.85, return on equity dropped below 3 percent, and interest coverage on a trailing basis ran at 4.8 times, and that was a slowdown, not a crisis. The backward-looking valuation lenses still read today's price as multiples of what trough economics support precisely because the trough was recent and real. At about 1.15x book value, the market is paying essentially full asset value for the fleet, and tanker asset values are themselves derivatives of the rate environment: when rates roll over, earnings and the collateral value beneath the price fall together. That correlation is what makes shipping equities crueler than their price-to-book ratios suggest.

What has to be true for the bear to be wrong is that mid-cycle rates settle far above 2025's levels and stay there. The price is not stretched against current fixtures, but it is a bet that the current fixtures are the new normal rather than the cycle's crest. Refinery closures in the OECD, ton-mile shifts from rerouting, and a thin near-term orderbook are all genuine supports, but each is a condition that can normalize: routes can shorten as fast as they lengthened, and the orderbook is thin only until it is not. The holder at $79.34 is underwriting the durability of a rate regime, and rate regimes in this industry have a documented habit of ending abruptly.

Valuation

Read against trailing operating income, the price is undemanding to the point of skepticism: at about 11x company-wide operating income, today's $79.34 (July 10, 2026) sits below what even a 5 percent annual operating-profit decline would warrant. The market, in other words, is pricing meaningful erosion as its base case, which is how investors have learned to treat spot-market shipping earnings near cyclical highs. The priced-in assumption lands within the range that plausible outcomes support, and that restraint, unusual for a stock up on booming rates, is itself the most notable feature of the setup.

The methods split along the cycle. The cash-flow lens reaches the price. The lenses built on the trailing year do not: normalized earnings power reads the price at roughly 2.7 times its central estimate, and the book-return frames read it around 4 times, because they capitalize a 2025 in which return on equity ran below 3 percent and trailing earnings were $1.85 per share. Those reads and the current environment are different bases, trailing trough versus present fixtures, and the bridge between them is the 2026 rate surge: first-quarter earnings alone were $4.58 per share basic, so the trailing-year denominators the static lenses rely on are already stale. The cleanest hard anchor is the balance sheet: at about 1.15x book value of $68.72 per share, the price pays a modest premium to fleet carrying value, and the company's agreed sale of six 2014-built vessels for $300 million in aggregate offers a live market check on that carrying value.

Solvency is a strength rather than a caveat. Liquid assets of $752 million exceed gross debt of $600 million, leaving a small net cash position; the company is generating cash, not burning it; and the share count has declined about 4 percent a year over four years, with a freshly replenished $500 million repurchase authorization to continue the shrinkage. The bet at today's price is not about the balance sheet and not really about the multiple. It is about where mid-cycle product tanker rates settle, and every number in this report is downstream of that single variable.

Catalysts

The second-quarter report is substantially pre-announced through fixtures: the company disclosed 88 percent of LR2 spot days booked at approximately $80,000 per day and 90 percent of MR days at roughly $53,000, among the strongest product tanker rates of the cycle, and sell-side estimates for the quarter cluster around $4.75 to $5.10 per share. The print will also confirm whether the six-vessel sale, three 2014-built LR2s for $195 million and three 2014-built MRs for $105 million, closed within the quarter as planned.

Capital return is the second live thread. The board replenished the 2023 securities repurchase program to $500 million, and the pace of execution against it, disclosed in the company's periodic updates, is the cleanest signal of how management weighs its own stock against fleet reinvestment at current asset prices. With first-quarter net income of $216.3 million and second-quarter fixtures at comparable or better rates, the cash available for buybacks is arriving faster than at any point in the trailing year.

The macro variables to watch are the ones that set the rates themselves: refined-product ton-mile demand, the pace of newbuild ordering and deliveries in the LR2 and MR classes, and any normalization of the longer trade routes that have absorbed tonnage. Rate durability through the seasonally softer third quarter would force the trailing-based valuation frames to re-anchor on a higher earnings base; a fade would confirm the erosion the price already partially discounts.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• TNK (TEEKAY TANKERS LTD.)
• FY2025 20-F: …were fully recovered from the customer, and the recovery is presented in revenues. (2) Includes certain services which were provided to us by the Entities under Common Control, which offset the corresponding expense we paid to the Entities under Common Control prior to our acquisition of the Acquired Operations on…
• FY2025 20-F: …expansion opportunities; • our dividend policy and ability to pay dividends on our common shares; • the crude oil and refined product tanker market fundamentals, including the balance of supply and demand in the tanker market, changes in the world tanker fleet, changes in global oil and refined products demand, the…
• CPK (CHESAPEAKE UTILITIES CORP)
• FY2025 10-K: …outside services costs, and higher depreciation and vehicle expenses compared to the prior year. Adjusted Gross Margin Items contributing to the year-over-year increase in adjusted gross margin are listed in the following table: (in millions) Propane Operations Increased propane customer consumption $ 4.5 Change in…
• FY2025 10-K: …increased by $2.6 million due to increased customer consumption related to the effects of colder weather in our Ohio service area and resulting from higher consumption from agricultural customers compared to the prior year. Other Operating Expenses Items contributing to the year-over-year increase in other operating…
• KEN (KEN)
• FY2025 20-F: …not to be sustained upon examination by tax authorities. The Group believes that its liabilities for unrecognized tax benefits, including related interest, are adequate in relation to the potential for additional tax assessments. There is a risk, however, that the amounts ultimately paid upon resolution of audits…
• FY2025 20-F: …and financing expenses, net, included within share of profit of associated companies, net and income tax expense. OPC's Adjusted EBITDA including proportionate share in Adjusted EBITDA of associated companies is defined as net profit/(loss) before depreciation and amortization, financing expenses, net, share of…
• PRDO (Perdoceo Education Corporation)
• FY2025 10-K: …within Corporate and Other. The increase in operating income for the current year was a result of revenue growth and continued management of operating expenses. The Company believes it is useful to present non-GAAP financial measures, such as adjusted operating income, which exclude certain non-cash items, as a means…
• FY2025 10-K: …operations, such as the 90-10 Rule and GE. We have experienced increased competition as more postsecondary education providers increase their online program offerings (in particular programs that are geared towards the needs of working adults), including traditional and community colleges that had not previously…
• MGEE (MGE Energy, Inc.)
• FY2025 10-K: 5 rate order included an earnings sharing mechanism, under which, if MGE earns above the 9.7% ROE authorized in the rate order: (i) MGE will retain 100% of earnings for the first 15 basis points above the authorized ROE; (ii) 50% of the next 60 basis points will be required to be deferred and returned to customers;…
• FY2025 10-K: Other Matters " below for summarized financial information regarding ATC. All Other Operations - MGE Energy Other income The increase of $0.6 million in other income from all other operations during 2025 compared to 2024, primarily reflects results from investment gains recognized in the current year, from venture…
• GSL (Global Ship Lease, Inc.)
• FY2025 20-F: 4 Table of Contents We will face substantial competition in expanding our business from a number of companies. Many of these competitors may have greater financial resources and a lower cost of capital than us, may operate larger fleets, may have been established for longer, and may be able to offer better charter…
• FY2025 20-F: …generally lowered their loan-to-value advance ratios, shortened loan terms, and accelerated repayment schedules. The actual or perceived credit quality of our charterers and proposed charterers, and any defaults by them, may materially affect our ability to obtain the additional capital resources that we will require…
• USAC (USA Compression Partners, LP)
• FY2025 10-K: …contracts at lower rates. We have several key customers. The loss of any of these customers would result in a decrease in our revenues and cash available for distribution. We provide compression services under contracts with several key customers. The loss of one of these key customers may have a greater effect on…
• FY2025 10-K: …EBITDA percentage are calculated as a percentage of revenue. Gross margin. The $11.5 million increase in gross margin for the year ended December 31, 2025, compared to the year ended December 31, 2024, was due to (i) a $47.7 million increase in revenues, offset by (ii) a $16.1 million increase in cost of operations,…
• ORA (ORMAT TECHNOLOGIES, INC.)
• FY2025 10-K: …competition led to a reduction in the operating margins, which in turn impacted our profitability. In the case of proposed EPC projects we also compete with other service suppliers, such as project/engineering companies or EPC contractors. Energy Storage Segment In the Energy Storage segment, we face significant…
• FY2025 10-K: …United 36 States and other markets. As these technologies mature and are deployed at commercial scale, such companies could become competitors to Ormat in the development of future geothermal projects, particularly in regions without conventional hydrothermal resources. Product Segment In our Product segment, we face…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.