TK

We rate TEEKAY CORP LTD (TK) as a Buy with a composite score of 65.9/100 at a current price of $12.25. The stock scores above average across the majority of our six quantitative factors and ranks #250 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in quality (86th percentile) and momentum (78th percentile), which together account for the majority of the composite score. Offsetting weakness in value (36th percentile) and investment (57th percentile) tempers our overall conviction. We assign a Narrow Moat rating (53/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

TEEKAY CORP LTD holds a lower-quartile position (#42 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 65.9/100 places it at rank #250 in our full 7,333-stock universe. At $631M in market capitalization, TEEKAY CORP LTD is a small-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (78th percentile), revenue contraction of -17% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 67% (+11.6pp vs sector) narrow to operating margins of 30% (+12.4pp vs sector) and net margins of 32.9%, yielding a gross-to-net conversion rate of 49%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $12.25, TEEKAY CORP LTD is trading at a premium to fundamental value. Our value factor score of 36/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 8.2x (a 52% discount to the sector median of 16.9x), EV/EBITDA of 0.2x (discounted to peers), P/B of 1.4x, P/S of 0.2x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to TEEKAY CORP LTD. The company exhibits strong financial stability with a beta of 0.49, conservative leverage (0% D/E), and a stability factor in the 57th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.49 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 57th percentile and quality factor at the 86th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 67% provide a buffer against cost pressures; conservative leverage (0% D/E) limits balance sheet risk; a 14.43% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate TEEKAY CORP LTD's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 226.3%, disciplined leverage (0% D/E), a 14.43% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — TEEKAY CORP LTD meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 14.43% dividend yield, and the combination of 74.6% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, TEEKAY CORP LTD receives a Buy rating with a composite score of 65.9/100 (rank #250 of 7,333). Our quantitative framework assigns a Narrow Moat (53/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 63/100.

Our analysis supports a constructive view on TEEKAY CORP LTD. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.