EQT Midstream Partners (NYSE: EQM) and Tallgrass Energy Partners (NYSE:TEP) are both mid-cap oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.
EQT Midstream Partners pays an annual dividend of $4.10 per share and has a dividend yield of 6.6%. Tallgrass Energy Partners pays an annual dividend of $3.86 per share and has a dividend yield of 8.8%. EQT Midstream Partners pays out 79.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy Partners pays out 102.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EQT Midstream Partners has raised its dividend for 5 consecutive years and Tallgrass Energy Partners has raised its dividend for 4 consecutive years.
71.4% of EQT Midstream Partners shares are held by institutional investors. Comparatively, 61.1% of Tallgrass Energy Partners shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares EQT Midstream Partners and Tallgrass Energy Partners’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|EQT Midstream Partners||$834.10 million||5.96||$571.90 million||$5.19||11.89|
|Tallgrass Energy Partners||$655.90 million||4.88||$433.99 million||$3.77||11.59|
EQT Midstream Partners has higher revenue and earnings than Tallgrass Energy Partners. Tallgrass Energy Partners is trading at a lower price-to-earnings ratio than EQT Midstream Partners, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent ratings and recommmendations for EQT Midstream Partners and Tallgrass Energy Partners, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|EQT Midstream Partners||0||5||7||0||2.58|
|Tallgrass Energy Partners||0||5||6||0||2.55|
EQT Midstream Partners currently has a consensus price target of $78.40, suggesting a potential upside of 27.07%. Tallgrass Energy Partners has a consensus price target of $48.67, suggesting a potential upside of 11.37%. Given EQT Midstream Partners’ stronger consensus rating and higher possible upside, research analysts plainly believe EQT Midstream Partners is more favorable than Tallgrass Energy Partners.
Risk and Volatility
EQT Midstream Partners has a beta of 0.94, meaning that its share price is 6% less volatile than the S&P 500. Comparatively, Tallgrass Energy Partners has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.
This table compares EQT Midstream Partners and Tallgrass Energy Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|EQT Midstream Partners||63.33%||25.24%||15.91%|
|Tallgrass Energy Partners||66.17%||28.25%||11.21%|
EQT Midstream Partners beats Tallgrass Energy Partners on 11 of the 16 factors compared between the two stocks.
About EQT Midstream Partners
EQT Midstream Partners, LP provides natural gas gathering, transmission, and storage services in Pennsylvania, West Virginia, and Ohio. The company owns, operates, acquires, and develops midstream assets in the Appalachian Basin. The company also owned approximately 300 miles of high pressure gathering lines and 1,500 miles of federal energy regulatory commission (FERC) regulated low pressure gathering lines; and approximately 950 miles of FERC regulated interstate pipelines. It serves local distribution companies, marketers, producers, and commercial and industrial users. EQT Midstream Services, LLC serves as the general partner of the company. EQT Midstream Partners, LP is headquartered in Pittsburgh, Pennsylvania.
About Tallgrass Energy Partners
Tallgrass Energy Partners, LP owns, operates, acquires and develops midstream energy assets in North America. The Company operates through three segments: Crude Oil Transportation & Logistics, Natural Gas Transportation & Logistics and Processing & Logistics. The Crude Oil Transportation & Logistics segment includes the ownership and operation of a Federal Energy Regulatory Commission (FERC) crude oil pipeline system, and crude oil storage and terminaling facilities. The Natural Gas Transportation & Logistics segment is engaged in the ownership and operation of FERC regulated interstate natural gas pipelines and integrated natural gas storage facilities. The Processing & Logistics segment is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities; the provision of water business services primarily to the oil and gas exploration and production industry, and the transportation of natural gas liquids (NGLs).
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