Scorpio Tankers (NYSE:STNG) Valuation Spotlight After Major Fleet Expansion Orders

Scorpio Tankers (NYSE:STNG) just announced it is expanding its fleet with plans to build two Very Large Crude Carriers at Hanwha Ocean Co. Ltd. in South Korea, as well as agreements for six additional vessels.

See our latest analysis for Scorpio Tankers.

Scorpio Tankers’ bold fleet expansion comes after a strong showing this year, with its share price climbing more than 20% since January and total shareholder return reaching nearly 22% over the past twelve months. Momentum has clearly been building, which reflects rising confidence in both the company's strategy and sector prospects.

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With shares still trading around a 20% discount to analyst price targets, investors are left to consider if Scorpio Tankers is undervalued after its recent run, or if the market has already factored in the next stage of growth.

Most Popular Narrative: 17.8% Undervalued

Scorpio Tankers is trading well below the most widely followed narrative fair value, set at $73.25 versus a last close of $60.19. This gap highlights a bullish market outlook, with recent upgrades in revenue growth and overall valuation projections giving the story stronger momentum.

Structural shifts in global refining and trade flows are boosting demand for Scorpio's fleet, supporting stronger freight rates and long-term revenue growth. Scorpio's young, efficient fleet and improved balance sheet enable market share gains, premium rates, shareholder returns, and resilience to regulatory changes.

Read the complete narrative.

Curious what underpins this confidence? The fair value hinges on a blend of long-term earnings assumptions and ambitious profit margins, along with an industry profit multiple usually seen in more established sectors. Ready to discover the pivotal analyst forecasts driving this target? The narrative is loaded with surprising projections just waiting to be explored.

Result: Fair Value of $73.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, elevated regulatory costs or changes in global energy demand could challenge the bullish case and potentially narrow earnings momentum in coming years.

Find out about the key risks to this Scorpio Tankers narrative.

Build Your Own Scorpio Tankers Narrative

If you have a different perspective or want to shape your own insights from the latest numbers, it only takes a few minutes to get started. So why not Do it your way?

A great starting point for your Scorpio Tankers research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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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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