Reviewing Semgroup Corporation (SEMG) & TransCanada Corporation (TRP)

Semgroup Corporation (NYSE: SEMG) and TransCanada Corporation (NYSE:TRP) are both mid-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.

Profitability

This table compares Semgroup Corporation and TransCanada Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Semgroup Corporation 0.24% 3.46% 1.60%
TransCanada Corporation 8.16% 12.08% 3.04%

Risk & Volatility

Semgroup Corporation has a beta of 2.04, suggesting that its stock price is 104% more volatile than the S&P 500. Comparatively, TransCanada Corporation has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Semgroup Corporation and TransCanada Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Semgroup Corporation 0 4 1 0 2.20
TransCanada Corporation 0 1 9 0 2.90

Semgroup Corporation presently has a consensus price target of $32.75, suggesting a potential upside of 14.31%. TransCanada Corporation has a consensus price target of $66.29, suggesting a potential upside of 34.62%. Given TransCanada Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe TransCanada Corporation is more favorable than Semgroup Corporation.

Dividends

Semgroup Corporation pays an annual dividend of $1.80 per share and has a dividend yield of 6.3%. TransCanada Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 4.1%. Semgroup Corporation pays out 6,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TransCanada Corporation pays out 232.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Semgroup Corporation has raised its dividend for 3 consecutive years. Semgroup Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

90.7% of Semgroup Corporation shares are held by institutional investors. Comparatively, 56.8% of TransCanada Corporation shares are held by institutional investors. 0.8% of Semgroup Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Semgroup Corporation and TransCanada Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Semgroup Corporation $1.66 billion 1.36 $147.28 million $0.03 955.00
TransCanada Corporation $11.40 billion 3.76 $5.38 billion $0.86 57.26

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

Summary

TransCanada Corporation beats Semgroup Corporation on 11 of the 17 factors compared between the two stocks.

About Semgroup Corporation

SemGroup Corporation is a provider of gathering, transportation, storage, distribution, marketing and other midstream services to producers, refiners of petroleum products and other market participants located in the Midwest and Rocky Mountain regions of the United States and Canada. The Company’s segments include Crude Transportation, which operates crude oil pipelines and truck transportation businesses in the United States; Crude Facilities, which operates crude oil storage and terminal businesses in the United States; Crude Supply and Logistics, which operates a crude oil marketing business; SemGas, which provides natural gas gathering and processing services; SemCAMS, which operates natural gas processing and gathering facilities in Alberta, Canada; SemLogistics, which owns petroleum products storage facility in the United Kingdom, and SemMexico, which provides liquid asphalt cement products and product application services to the Mexican market, and Corporate and Other.

About TransCanada Corporation

TransCanada Corporation is an energy infrastructure company. The Company is engaged in the development and operation of North American energy infrastructure, including natural gas and liquids pipelines, power generation and natural gas storage facilities. Its segments include Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Energy. The Company operates in three businesses: Natural Gas Pipelines, Liquids Pipelines and Energy. The Natural Gas Pipelines and Liquids Pipelines segments principally consist of its respective natural gas and liquids pipelines in Canada, the United States and Mexico, as well as its regulated natural gas storage operations in the United States. The Energy segment includes its power operations and the non-regulated natural gas storage business in Canada. TransCanada PipeLines Limited (TCPL) is its principal operating subsidiary.

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