Critical Review: Ultrapar Participacoes (NYSE:UGP) & Torm (NASDAQ:TRMD)

Ultrapar Participacoes (NYSE:UGP) and Torm (NASDAQ:TRMD) are both mid-cap energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, risk, profitability and valuation.

Volatility and Risk

Ultrapar Participacoes has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500. Comparatively, Torm has a beta of 0.07, indicating that its share price is 93% less volatile than the S&P 500.

Profitability

This table compares Ultrapar Participacoes and Torm’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ultrapar Participacoes	2.28%	18.84%	7.17%
Torm	35.51%	27.24%	17.96%

Analyst Recommendations

This is a summary of recent ratings and price targets for Ultrapar Participacoes and Torm, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ultrapar Participacoes	0	4	3	0	2.43
Torm	0	2	1	1	2.75

Ultrapar Participacoes presently has a consensus price target of $6.54, indicating a potential downside of 12.04%. Torm has a consensus price target of $38.00, indicating a potential downside of 5.00%. Given Torm’s stronger consensus rating and higher possible upside, analysts plainly believe Torm is more favorable than Ultrapar Participacoes.

Earnings & Valuation

This table compares Ultrapar Participacoes and Torm”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ultrapar Participacoes	$25.51 billion	0.33	$439.48 million	$0.61	12.19
Torm	$1.34 billion	3.05	$285.30 million	$6.07	6.59

Ultrapar Participacoes has higher revenue and earnings than Torm. Torm is trading at a lower price-to-earnings ratio than Ultrapar Participacoes, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

3.6% of Ultrapar Participacoes shares are held by institutional investors. Comparatively, 73.9% of Torm shares are held by institutional investors. 1.8% of Ultrapar Participacoes shares are held by insiders. Comparatively, 0.4% of Torm shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Ultrapar Participacoes pays an annual dividend of $0.31 per share and has a dividend yield of 4.2%. Torm pays an annual dividend of $7.01 per share and has a dividend yield of 17.5%. Ultrapar Participacoes pays out 50.8% of its earnings in the form of a dividend. Torm pays out 115.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Torm beats Ultrapar Participacoes on 10 of the 17 factors compared between the two stocks.

About Ultrapar Participacoes

Ultrapar Participações S.A., through its subsidiaries, operates in the energy and infrastructure business in Brazil. The company distributes liquefied petroleum gas to residential, commercial, and industrial consumers, in addition to renewable electricity and compressed natural gas. It also operates in the distribution and marketing of gasoline, ethanol, diesel, fuel oil, kerosene, natural gas for vehicles, and lubricants; and holds AmPm convenience stores and provides JetOil lubricant services. In addition, the company operates liquid bulk storage terminals. Further, it offers digital payments services, combining the abastece aí app and the loyalty program Km de Vantagens. It also exports its products and services to customers in Europe, Singapore, the United States, Canada, other Latin American countries, and internationally. The company was founded in 1937 and is headquartered in São Paulo, Brazil.

About Torm

TORM plc, a shipping company, owns and operates a fleet of product tankers in the United Kingdom. It operates in two operating segments, Tanker and Marine Exhaust. The Tanker segment transports refined oil products, such as gasoline, jet fuel, kerosene, naphtha, and gas oil, as well as dirty petroleum products, including fuel oil. The Marine Exhaust segment engages in developing and producing advanced and green marine equipment. TORM plc was founded in 1889 and is based in London, the United Kingdom.