What Happened?
Shares of tanking company Scorpio Tankers (NYSE: STNG) jumped 1.8% in the morning session after the company announced a significant five-year time charter-out agreement for one of its product tankers and provided an update on its daily charter rates for the third quarter of 2025.
Scorpio Tankers secured a five-year contract for its 2014-built LR2 tanker, the STI Orchard, at a rate of $28,350 per day. This long-term agreement provides stable and predictable revenue for the company. Additionally, Scorpio Tankers reported strong current Time Charter Equivalent (TCE) rates for the third quarter. Its LR2 vessels are earning an average of $32,700 per day in the spot market, with MR tankers at $23,500 per day. High fleet utilization, with over 85% of revenue days booked for its LR2 and MR fleets, further underscores the robust market conditions. This combination of a long-term charter and strong spot rates signals healthy demand and profitability, boosting investor confidence.
After the initial pop the shares cooled down to $52.71, up 2.5% from previous close.
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What Is The Market Telling Us
Scorpio Tankers’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 18 days ago when the stock gained 4.7% on the news that the stock continued to rally as the company reported second-quarter 2025 earnings that surpassed analysts' expectations on both the top and bottom lines.
The company posted earnings per share (EPS) of $1.53, handily beating the consensus forecast of $1.05. Revenue also came in strong at $230.2 million, surpassing the anticipated $218.9 million. This robust performance demonstrates operational strength and comes at a time when freight rates in certain segments, like the LR2 tanker market in the Middle East, have recently weakened. Scorpio's results were supported by its strategic advantages, including maintaining one of the youngest fleets in the industry and a strong balance sheet, with its net debt considered safe. Following the strong report, several analysts have revised their future earnings expectations upward.
Scorpio Tankers is up 5.4% since the beginning of the year, but at $52.71 per share, it is still trading 29.1% below its 52-week high of $74.31 from October 2024. Investors who bought $1,000 worth of Scorpio Tankers’s shares 5 years ago would now be looking at an investment worth $4,092.
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