Teekay Tankers continues to tank. Expect more dividend cuts.

Teekay Tankers Ltd. (TNK)

Share price: $4.87

Shares: 61.88 million

Market capitalization: $300.10 million

This stock is SPECUATIVELY priced at almost 20 times average adjusted 3 year earnings


Teekay’s dividend record has been an a downward trend along with its stock price since 2008.


Dividend: Teekay cut its dividend on November 9th, 2011 from $0.21 per quarter to $0.15 per quarter  (note: the new dividend doesn’t show on the graphic above)

Dividend Yield: 12.26% ($0.60 annual dividend / $4.87 share price)

Dividend payout ratio: 240% ($0.60 annual DIV / $0.25 average adjusted EPS)  I’m confident that TNK will continue to cut its dividend.

EARNING POWER $0.25 per share @ 61.88 million shares from 2009-2011E

Consider contrarian buying below $2.00 per share (8x its three year average adjusted earnings)

Consider value buying below $3.00 per share (12x its three year average adjusted earnings)

Consider speculative selling above $5.00 per share (20x its three year average adjusted earnings)

Teekay Tankers currently trades at 19.48 times its three year average adjusted earnings

            EPS                   Net inc.             Shares               Adj EPS

2006     $2.68                $40.2 M             –                       $0.64

2007     $2.76                $40.6 M             13.38 M             $0.66

2008     $2.03                $58.1 M             25.00 M             $0.94

2009     $1.28                $38.9 M             28.64 M             $0.63

2010     $0.37                $14.7 M             42.33 M             $0.24

2011E   ($0.11 E)           ($6.8 M)            61.88 M             ($0.12 E)

2011 Estimated earnings using a low number on Q4:

   Q1     $0.12                $7.1 M              57.39 M             $0.11

   Q2     $0.02                $1.4 M              61.88 M             $0.02

   Q3     ($0.28)             ($17.1 M)          61.88 M             ($0.28)

   Q4     $0.03 low E       $1.8 M              61.88 M             $0.03 low E


Total     ($0.11 E)           ($6.8 M)            61.88 M             ($0.12 E)

Wall Street estimates according to Reuters financial website appear below.  I used the most conservative Low for the quarter ending Dec-11 to complete my estimate above.



TNK’s balance sheet is not strong.  Teekay Tanker’s balance sheet has been shrinking for the past two quarters.  It will continue to erode as earnings decrease.


Book value per share: $8.06

Price to book value ratio: 0.60 (good)

Current ratio: 1.57 (over 2.0 is good)

Quick ratio: 0.60 (over 1.0 is good)


Teekay Tankers has been cutting its dividend instead of growing it.  Its earning power is diminishing.  The third quarter’s disappoint results continue the earnings trend down below zero into losses.  And its balance sheet is eroding.  Don’t even consider buying until the stock price drops to the $2.00 to $3.00 range.  Oh yeah, and there is a huge tanker ship glut from the boom times that ended in 2007.



I don’t own Teekay Tankers Ltd.

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Published in: on November 14, 2011 at 6:20 pm  Leave a Comment  

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