Scorpio Tankers' (STNG) Attractively Low P/E Ratio and Potential Undervaluation: A Value Investing Perspective

In the realm of value investing, few metrics are as pivotal as the price-to-earnings (P/E) ratio, which serves as a barometer for a company's valuation relative to its earnings. Scorpio Tankers Inc. (STNG), a major player in the global tanker industry, has drawn attention for its current P/E ratio of 9.14 as of November 2025, a figure that sits below the broader shipping sector's average of 11.83 according to industry data and suggests potential undervaluation. This analysis explores STNG's valuation dynamics, contextualizes its position within the shipping industry, and evaluates its appeal for value investors.

STNG's P/E Ratio: A Historical and Sectoral Benchmark

Scorpio Tankers' trailing twelve-month (TTM) P/E ratio of 9.14 marks a significant departure from its historical averages. Over the past decade, the company's P/E has averaged 5.82, while its 3- and 5-year averages hover near 4.8. This 53% increase from historical norms indicates a gradual re-rating of the stock, potentially reflecting improved earnings visibility or market optimism about the company's operational performance. However, compared to its 2024 P/E of 3.54, the current ratio suggests a more moderate valuation.

Sectorally, STNG's P/E of 9.14 positions it as a value stock relative to peers. For instance, Teekay Tankers (TNK) trades at 8.98, while DHT Holdings (DHT) has a P/E of 11.68 according to market data. These comparisons highlight STNG's competitive positioning within the tanker subsector. Yet, the company's valuation is notably higher than some industry outliers, such as Performance Shipping (PSHG), which sports a P/E of 1.84, and Old Dominion Freight Line, a shipping-related stock with a P/E of 28.6 according to market reports. Such dispersion underscores the shipping industry's fragmented valuation landscape.

The Shipping Sector's Valuation Context

The broader shipping industry's P/E ratio as of November 2025 is reported at 11.83, a figure derived from industry-wide data. This valuation is markedly lower than the S&P 500's trailing P/E of 28.1 according to market analysis, reflecting the sector's subdued growth expectations. The U.S. Marine and Shipping Industry, in particular, has a P/E of 7.6x according to industry reports, a steep decline from its 3-year average of 15.5x. This contraction is attributed to a 35% annual decline in earnings and a 10% drop in revenue over the past three years according to financial data, signaling investor caution amid macroeconomic headwinds.

The sector's undervaluation is further evident in the performance of individual stocks. Seanergy Maritime Holdings (SHIP), for example, trades at a P/E of 15.15, a 135% increase from its 12-month average of 6.44. Such volatility highlights the shipping industry's sensitivity to cyclical factors like freight rates, fuel costs, and global trade dynamics. For value investors, this environment presents opportunities to identify stocks like STNG, which combine reasonable valuations with stronger fundamentals.

Why STNG Stands Out for Value Investors

Scorpio Tankers' P/E of 9.14 is not merely a function of depressed industry conditions but also a reflection of its operational resilience. The company's fleet of modern, energy-efficient vessels positions it to capitalize on long-term trends such as the transition to cleaner fuels and the growing demand for crude oil transportation. Additionally, STNG's leverage ratios and cost structure appear more favorable than those of peers like International Seaways which trades at 11.60 and Cactus, Inc. which trades at 17.42, which trade at higher multiples despite similar business models.

However, the stock's valuation must be contextualized within the sector's broader challenges. The shipping industry's P/E10 ratio-a 10-year average- stands at 38.9, far exceeding the current 11.83 according to industry data. This discrepancy suggests that the sector is trading at a significant discount to its historical norms, a condition that could persist if macroeconomic risks (e.g., a global slowdown) outweigh structural tailwinds. For STNG, this means its 9.14 P/E may still be a floor rather than a ceiling, particularly if earnings growth accelerates.

Conclusion: A Case for Cautious Optimism

Scorpio Tankers' attractively low P/E ratio, coupled with its favorable position relative to peers, makes it a compelling candidate for value investors. While the shipping sector's overall undervaluation reflects legitimate concerns about earnings stability, STNG's operational strengths and moderate valuation offer a margin of safety. Investors should monitor key drivers such as freight rate trends, regulatory developments, and the company's ability to manage debt. In a sector where volatility is the norm, STNG's current valuation appears to balance risk and reward effectively.