KNOT Offshore Partners (NYSE:KNOP) & Frontline (NYSE:FRO) Critical Review

Frontline (NYSE:FRO) and KNOT Offshore Partners (NYSE:KNOP) are both transportation companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, earnings, institutional ownership and profitability.

Dividends

Frontline pays an annual dividend of $0.76 per share and has a dividend yield of 2.3%. KNOT Offshore Partners pays an annual dividend of $0.10 per share and has a dividend yield of 0.9%. Frontline pays out 77.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KNOT Offshore Partners pays out 6.5% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of recent ratings for Frontline and KNOT Offshore Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Frontline	1	1	4	0	2.50
KNOT Offshore Partners	0	5	0	0	2.00

Frontline presently has a consensus price target of $25.87, indicating a potential downside of 22.29%. Given Frontline’s stronger consensus rating and higher possible upside, analysts clearly believe Frontline is more favorable than KNOT Offshore Partners.

Valuation and Earnings

This table compares Frontline and KNOT Offshore Partners”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Frontline	$2.16 billion	3.43	$495.58 million	$0.98	33.97
KNOT Offshore Partners	$318.60 million	N/A	$13.93 million	$1.55	6.82

Frontline has higher revenue and earnings than KNOT Offshore Partners. KNOT Offshore Partners is trading at a lower price-to-earnings ratio than Frontline, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

22.7% of Frontline shares are owned by institutional investors. Comparatively, 26.8% of KNOT Offshore Partners shares are owned by institutional investors. 48.1% of Frontline shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Frontline and KNOT Offshore Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Frontline	12.23%	8.89%	3.44%
KNOT Offshore Partners	14.69%	9.00%	2.93%

Volatility and Risk

Frontline has a beta of 0.07, indicating that its share price is 93% less volatile than the S&P 500. Comparatively, KNOT Offshore Partners has a beta of -0.12, indicating that its share price is 112% less volatile than the S&P 500.

Summary

Frontline beats KNOT Offshore Partners on 10 of the 15 factors compared between the two stocks.

About Frontline

Frontline plc, a shipping company, engages in the seaborne transportation of crude oil and oil products worldwide. It owns and operates oil and product tankers. As of December 31, 2022, the company operated a fleet of 70 vessels. It is also involved in the charter, purchase, and sale of vessels. The company was founded in 1985 and is based in Limassol, Cyprus.

About KNOT Offshore Partners

KNOT Offshore Partners LP acquires, owns, and operates shuttle tankers under long-term charters in the North Sea and Brazil. The company provides loading, transportation, and discharge of crude oil under time charters and bareboat charters. The company was founded in 2013 and is headquartered in Aberdeen, the United Kingdom.