Teekay Offshore Partners LP – Value Analysis (NYSE:TOO) : November 13, 2017

Capitalcube gives Teekay Offshore Partners LP a score of 28.

Our analysis is based on comparing Teekay Offshore Partners LP with the following peers – Teekay Corporation, Frontline Ltd., Teekay Tankers Ltd. Class A, Nordic American Tankers Limited, Ardmore Shipping Corp., Teekay LNG Partners L.P., DHT Holdings, Inc., Ship Finance International Limited, Petroleo Brasileiro SA Sponsored ADR and Magellan Midstream Partners, L.P. (TK-US, FRO-US, TNK-US, NAT-US, ASC-US, TGP-US, DHT-US, SFL-US, PBR-US and MMP-US).

Investment Outlook

Teekay Offshore Partners LP has a fundamental score of 28 and has a relative valuation of UNDERVALUED.

Fundamental Score

Access our research and ratings on Teekay Offshore Partners LP

Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It trades at a lower Price/Book multiple (0.26) than its peer median (0.60).
  • The market expects TOO-US‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • TOO-US has relatively low profit margins and median asset efficiency.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • Over the last five years, TOO-US‘s return on assets has eroded from above median to below median among its peers suggesting declining relative operating performance.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While TOO-US‘s revenues growth has been below the peer median in the last few years, the market still gives the stock a P/E ratio that is around peer median and seems to see the company as a long-term strategic bet.
  • The company seems to be over-investing in a business with median returns.
  • TOO-US seems too levered to raise additional debt.

Access our research and ratings on Teekay Offshore Partners LP

Leverage & Liquidity

TOO-US would seem to have a hard time raising additional debt.

  • With debt at a relatively high 78.01% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 65.86%), and relatively tight interest coverage level of 1.42x, TOO-US would have a hard time raising much additional debt. The company has a Constrained profile in terms of its ability to take on further debt.
  • All 10 peers for the company have an outstanding debt balance.

TOO-US has maintained its Limited Flexibility profile from the recent year-end.

  • TOO-US‘s interest coverage is its lowest relative to the last five years and compares to a high of 4.19x in 2012.
  • The decrease in its interest coverage to 1.42x from 1.96x (in 2016) was also accompanied by a decrease in its peer median during this period to 1.53x from 2.80x.
  • Interest coverage rose 0.73 points relative to peers.
  • TOO-US‘s debt-EV is its lowest relative to the last five years and compares to a high of 83.05% in 2015.
  • Like the interest coverage trend, the decrease in its debt-EV (to 78.01% from 80.96%) was also accompanied by a decrease in its peer median during this period (to 65.86% from 68.07%).
  • Relative to peers, debt-EV fell 0.75 percentage points.

Access the detailed analysis for Teekay Offshore Partners LP

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Teekay Corporation 68.07 0.81 1.1 7.35
Frontline Ltd. 67.73 1.66 1.68 11.5
Teekay Tankers Ltd. Class A 76.27 0.67 0.73 6.61
Nordic American Tankers Limited 46.37 3.52 -0.6 31.29
Ardmore Shipping Corp. 65.86 1.57 0.41 6.8
Teekay LNG Partners L.P. 64.04 0.32 2.53 6.66
DHT Holdings, Inc. 63.34 1.75 2.1 18.49
Ship Finance International Limited 64.93 0.8 1.85 11.85
Petroleo Brasileiro SA Sponsored ADR 87.71 2.04 1.53 20.82
Magellan Midstream Partners, L.P. 19.23 0.5 4.42 26.59
Teekay Offshore Partners L.P. 78.01 0.54 1.42 6.51
Peer Median 65.86 0.81 1.53 11.5
Best In Class 19.23 3.52 4.42 31.29

Looking for more metrics and analysis for Teekay Offshore Partners LP?

Company Profile

Teekay Offshore Partners LP provides marine transportation, oil production and storage services to the offshore oil industry. It owns interests in shuttle tankers, floating production, storage and offloading units, floating storage and offtake units and conventional oil tankers. The company operates through the following segments: Shuttle Tanker; Floating Production, Storage and Offloading; Units for Maintenance and Safety; Towage; Conventional Tanker, and Floating Storage and Offtake. The Shuttle Tanker segment consists of shuttle tankers operating primarily on fixed-rate contracts of affreightment, time-charter contracts or bareboat charter contracts. The Floating Production, Storage and Offloading segment consists of its FPSO units subject to operations and charter contracts. The Units for Maintenance and Safety segment is used primarily for offshore accommodation, storage and support for maintenance and modification projects on existing offshore installations, or during the installation and decommissioning of large floating exploration, production and storage units, including FPSO units, FLNG units and floating drill rigs. The Towage segments long-distance towing and offshore installation vessels are used for the towage, station-keeping, installation and decommissioning of large floating objects such as exploration, production and storage units, including FPSO units, floating liquefied natural gas units and floating drill rigs. The Conventional Tanker segment consists of conventional tankers operating on fixed-rate, time-charter contracts or bareboat charter contracts. The Floating Storage and Offtake segment consists of its FSO units subject to fixed-rate, time-charter contracts or bareboat charter contracts. Teekay Offshore GP L.L.C. serves as the general partner of the company. Teekay Offshore Partners was founded on August 31, 2006 and is headquartered in Hamilton, Bermuda.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.