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We are seeing multiple indications of a potential downward movement for Teekay Corporation (TK) from our proprietary investment program and believe TK will move down to $25 within the next two months. The option chart below shows the increase in put options over the last several weeks, which we believe is based on an impending move down for TK.

Why TK:

    • Increase in Option Volume
    • Increase in Open Interest
    • Increase in Implied Volatility
    • Trailing P/E (ttm, intraday) 60.49
    • Forward P/E (fye Dec 31, 2011) 18.15
    • Price/Sales (ttm) 0.93
    • Price/Book (mrq) 0.89
    • Enterprise Value/Revenue (ttm) 3.32
    • Enterprise Value/EBITDA (ttm) 11.6

    click to enlarge images

TK Options TK Stock

Teekay Corporation (Teekay), incorporated on February 9, 1979, is a provider of international crude oil and petroleum product transportation services. With a fleet of 150 vessels, offices in 16 countries, Teekay provides marine services to the oil and gas companies, helping them link their upstream energy production to their downstream processing operations. The company operates in four business segments: shuttle tanker and floating storage and off-take (FSO) segment, and floating production, storage and offloading (FPSO) segment; liquefied gas segment; conventional tanker segment, and fixed-rate tanker segment. The Company's shuttle tanker and FSO segment and FPSO segment includes its shuttle tanker operations, FSO units, and its FPSO units, which primarily operate under long-term fixed-rate contracts. As of December 31, 2009, its shuttle tanker fleet, including newbuildings on order, had a total cargo capacity of approximately 4.7 million deadweight tons (dwt).

The company's liquefied gas segment includes its liquefied natural gas (LNG) and liquefied petroleum gas (LPG) carriers. All of its LNG and LPG carriers are subject to long-term, fixed-rate time-charter contracts. As of December 31, 2009, this fleet, including newbuildings on order, had a total cargo carrying capacity of approximately 3.1 million cubic meters. Its conventional tanker segment includes conventional crude oil tankers and product carriers. As of December 31, 2009, the company's Aframax tankers in the spot tanker sub-segment, which had a total cargo capacity of approximately 4.4 million dwt, represented approximately 7% of the total tonnage of the world Aframax fleet. The company's fixed-rate tanker segment includes its conventional crude oil and product tankers on long-term fixed-rate time-charter contracts.

Shuttle Tanker and FSO Segment and FPSO Segment

The main services its shuttle tanker and FSO segment and its FPSO segment provide to customers include offloading and transportation of cargo from oil field installations to onshore terminals through offshore loading shuttle tankers; floating storage for oil field installations via FSO units, and floating production, processing and storage services through FPSO units. As of December 31, 2009, the company owned 31 shuttle tankers (including four newbuildings) and chartered-in an additional eight shuttle tankers. As of December 31, 2009, the company had six FSO units. The major markets for FSO units are Asia, the Middle East, West Africa, South America and the North Sea. At December 31, 2009, the company had five FPSO units. During 2009, a total of approximately 47% of its net revenues were earned by the vessels in the shuttle tankers and FSO segment and FPSO segment.

Liquefied Gas Segment

The company's liquefied gas segment primarily consists of LNG and LPG carriers subject to long-term, fixed-rate time-charter contracts. As of December 31, 2009, the company had 15 LNG carriers and an additional four newbuilding LNG carriers on order, which were scheduled to commence operations upon delivery under long-term fixed-rate time-charters and in which its interests is 33%. In addition, as of December 31, 2009, it had six LPG carriers, of which three are under construction. During 2009, approximately 13% of the company's net revenues were earned by the vessels in its liquefied gas segment.

Conventional Tanker Segment

As of December 31, 2009, the company's Aframax tanker fleet (excluding Aframax-size shuttle tankers and newbuildings) had an average age of approximately 11 years and its Suezmax tanker fleet (excluding Suezmax-size shuttle tankers and newbuildings) had an average age of approximately six years. As of December 31, 2009, other operators of Aframax tonnage (including newbuildings on order) included Malaysian International Shipping Corporation (approximately 63 Aframax vessels), Sovcomflot (approximately 41 vessels), Aframax International Pool (approximately 41 Aframax vessels) and the Sigma Pool (approximately 31 vessels). Other large operators of Suezmax tonnage (including newbuildings on order) included Sovcomflot (approximately 21 vessels), the Blue Fin Pool (approximately 16 vessels), Delta Tankers (approximately 13 vessels) and the Stena Sonangol Pool (approximately 13 vessels). During 2009, approximately 24% of its net revenues were earned by the vessels in spot tanker segment.

Fixed-Rate Tanker Segment

The vessels in its fixed-rate tanker segment primarily consists of Aframax and Suezmax tankers that are employed on long-term time-charters. It consider contracts that have an original term of less than three years in duration to be short term. During 2009, approximately 16% of its net revenues were earned by the vessels in the fixed-rate tanker segment.

Currently trading at $27.25, we believe, based on our proprietary program, that a downward movement to $25.00 within the next two months is forthcoming. TK trades on average 500,000 shares per day, and has traded up from $25.00 back in May.

We recommend selling the equity straight out at $27.20 or higher. If you like derivatives, we recommend the September 30 Puts. If you want to take additional risk/reward the September 25 Puts are also recommended.

Sell: Equity - TK - Teekay Corp., - $27.25

Buy: Derivatives - TK100918P30, -TK100918P25 - Sept 30 & Sept 25 Puts

Equity Target: $25.00

Potential Event: Unknown inefficiency in dissemination of information.

Risks: Medium.

ADDITIONAL METRICS

RELATED COMPANIES

Ticker

Company name

Exchange

Price

Change

Chg %

Earnings per share

P/E ratio

Mkt Cap

TK

Teekay Corporation

NYSE

27.21

+0.08

0.29%

1.75

15.54

1.98B

TGP

Teekay LNG Partners L.P.

NYSE

34.70

-0.08

-0.23%

0.89

38.85

1.82B

TNK

Teekay Tankers Ltd.

NYSE

13.44

-0.16

-1.18%

1.00

13.50

583.19M

GLNG

Golar LNG Limited (USA)

NASDAQ

10.95

-0.08

-0.73%

0.38

29.14

739.97M

OSG

Overseas Shipholding G...

NYSE

36.31

-0.14

-0.38%

-2.26

1.10B

TNP

Tsakos Energy Navigati...

NYSE

14.39

-0.48

-3.23%

0.63

22.98

540.73M

GMR

General Maritime Corp.

NYSE

5.55

+0.01

0.18%

-1.10

493.42M

FRO

Frontline Ltd. (USA)

NYSE

30.93

-0.17

-0.55%

1.36

22.77

2.41B

SFL

Ship Finance Intl. Ltd.

NYSE

19.54

-0.15

-0.76%

2.68

7.28

1.55B

FINANCIALS:

In Millions of USD(except for per share items)

3 months ending 2009-09-30

3 months ending 2009-06-30

Revenue

522.66

500.37

Other Revenue, Total

-

-

Total Revenue

522.66

500.37

Cost of Revenue, Total

314.73

314.06

Gross Profit

207.92

186.30

Selling/General/Admin. Expenses, Total

56.41

52.24

Research & Development

-

-

Depreciation/Amortization

115.32

107.11

Interest Expense(Income) - Net Operating

-

-

Unusual Expense (Income)

25.34

2.37

Other Operating Expenses, Total

-

-

Total Operating Expense

511.81

475.79

Operating Income

10.85

24.58

Interest Income(Expense), Net Non-Operating

-

-

Gain (Loss) on Sale of Assets

-

-

Other, Net

4.62

2.94

Income Before Tax

87.97

-154.98

Income After Tax

77.26

-165.88

Minority Interest

-47.46

23.63

Equity In Affiliates

-

-

Net Income Before Extra. Items

29.80

-142.25

Accounting Change

-

-

Discontinued Operations

-

-

Extraordinary Item

-

-

Net Income

29.80

-142.25

Disclosure: No positions

Source: Teekay Corporation: Heading Down