- If you are wondering whether Scorpio Tankers at around US$80 per share still offers value, the key question is how that price compares with what the business may be worth.
- The stock has slipped around 2.3% over the last week, but is up 5.6% over 30 days, 61.4% year to date and 106.7% over the past year, which can change how investors think about risk and reward.
- Recent coverage has focused on Scorpio Tankers as an established player in the product tanker space, with attention on how shipping market conditions and charter rates relate to its current share price. This context helps explain why the stock has drawn more interest after its 3 year return of 80.0% and very large 5 year gain of around 3x.
- On Simply Wall St's valuation checks, Scorpio Tankers records a value score of 6/6. The rest of this article will walk through the key valuation methods behind that result, then finish with a broader way to think about what the stock might be worth over time.
Approach 1: Scorpio Tankers Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model takes estimates of a company’s future cash flows and discounts them back to today’s value. It aims to estimate what the entire business might be worth now based on those future dollars.
For Scorpio Tankers, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model. The latest twelve month free cash flow is around $539.3 million. Analyst inputs and extrapolations then project annual free cash flows through to 2035, with estimates such as $1,286 million in 2026 and $441 million in 2028. Beyond the analyst horizon, the model tapers the figures using smaller estimated changes each year.
Discounting all those projected cash flows back to today gives an estimated intrinsic value of about $116.54 per share. Compared with a current share price around $80, this approach suggests the stock trades at roughly a 31.2% discount to that intrinsic value. This indicates a potentially meaningful valuation gap.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Scorpio Tankers is undervalued by 31.2%. Track this in your watchlist or portfolio, or discover 49 more high quality undervalued stocks.
Approach 2: Scorpio Tankers Price vs Earnings
For a profitable company, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. A higher P/E can reflect higher growth expectations or lower perceived risk, while a lower P/E can reflect lower growth expectations or higher perceived risk. So what counts as a “normal” or “fair” P/E usually depends on those two forces.
Scorpio Tankers currently trades on a P/E of 7.3x. This sits well below the Oil and Gas industry average of about 14.6x and a peer average of about 14.6x, which on simple comparisons points to a lower earnings multiple than many similar stocks.
Simply Wall St’s Fair Ratio for Scorpio Tankers is 11.0x. This is a proprietary estimate of what the P/E might be based on factors such as earnings growth, profit margins, industry, market cap and key risks. Because it is tailored to the company, the Fair Ratio can be more informative than a straight comparison with peers or the broad industry. Setting that Fair Ratio of 11.0x against the current P/E of 7.3x suggests the stock trades at a discount on this measure.
Result: UNDERVALUED
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Upgrade Your Decision Making: Choose your Scorpio Tankers Narrative
Earlier we mentioned that there is an even better way to understand valuation. This is where Narratives come in as a simple way for you to attach a clear story about Scorpio Tankers to the numbers you see on Simply Wall St, linking your view of its future revenue, earnings and margins to a Fair Value that you can compare with the current share price.
A Narrative is your own structured view of the company. You spell out what you think is driving Scorpio Tankers, connect that story to a financial forecast, then see the Fair Value that falls out of those assumptions instead of relying only on headline ratios like P/E or a single analyst target.
On Simply Wall St, Narratives sit in the Community page and are designed to be easy to use. You can pick from existing scenarios or sketch your own, then instantly see whether your Fair Value suggests the stock looks expensive or cheap compared with the live market price. This can help you decide whether you are more comfortable buying, holding or selling.
Because Narratives on the platform update as new news, earnings or guidance are added, your Fair Value view can adjust in real time. You can see how different assumptions, such as the bullish Fair Value around US$90.00 or the more cautious Fair Value around US$70.00 for Scorpio Tankers, reflect very different stories about future cash generation, margins and risk.
For Scorpio Tankers however, we will make it really easy for you with previews of two leading Scorpio Tankers Narratives:
Each one links today’s price to a different story about future earnings, revenue and risks, so you can quickly decide which feels closer to your own view.
Fair Value: US$86.67
Gap to Fair Value vs last close of US$80.21: trades at about a 7.4% discount to this narrative fair value.
Revenue Growth Assumption: revenue is assumed to decline 93.01% over the long run.
- Expects Scorpio Tankers to keep benefiting from longer trade routes, refinery shifts and a relatively young fleet that can support utilization and margins.
- Assumes profit margins rise toward about 41.7% over the next few years, with earnings in the analysts’ central case moving from US$344.3 million to US$380.3 million by 2029.
- Views the stock as fairly close to consensus targets, with the analyst group clustering around a fair value near US$86.67 and a future P/E of about 13.8x if those earnings materialize.
Fair Value: US$70.00
Gap to Fair Value vs last close of US$80.21: trades at about a 14.6% premium to this narrative fair value.
Revenue Growth Assumption: revenue is assumed to decline 111.36% over the long run.
- Focuses on the risk that stricter environmental rules, higher capex needs and possible overcapacity could pressure margins and earnings over time.
- Builds in falling revenue and margin compression, with earnings in the bearish case moving from US$359.0 million to US$183.7 million by 2028, even while the P/E multiple drifts higher.
- Anchors on the lowest analyst targets around US$49.00 to US$70.00 and treats current product tanker strength as cyclical, with limited room for further upside if conditions soften.
If you want to see how your own assumptions compare with these, start by asking which of these stories feels closer to how you see product tanker demand, regulation and Scorpio Tankers’ ability to keep converting that into free cash flow. The Community Narratives on Simply Wall St let you adjust the levers and see how your personal Fair Value stacks up against the current share price and these analyst driven cases.
To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Scorpio Tankers on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.
Do you think there's more to the story for Scorpio Tankers? Head over to our Community to see what others are saying!
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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