Head to Head Review: USA Compression Partners (USAC) versus Energy Transfer (ET)

USA Compression Partners (NYSE:USAC) and Energy Transfer (NYSE:ET) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, risk, dividends, institutional ownership and profitability.

Institutional and Insider Ownership

42.3% of USA Compression Partners shares are held by institutional investors. Comparatively, 44.1% of Energy Transfer shares are held by institutional investors. 3.3% of Energy Transfer shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

USA Compression Partners has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500. Comparatively, Energy Transfer has a beta of 1.89, meaning that its stock price is 89% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for USA Compression Partners and Energy Transfer, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
USA Compression Partners 0 2 4 0 2.67
Energy Transfer 0 0 1 0 3.00

USA Compression Partners presently has a consensus price target of $20.67, suggesting a potential upside of 39.64%. Energy Transfer has a consensus price target of $20.00, suggesting a potential upside of 27.71%. Given USA Compression Partners’ higher probable upside, analysts clearly believe USA Compression Partners is more favorable than Energy Transfer.

Dividends

USA Compression Partners pays an annual dividend of $2.10 per share and has a dividend yield of 14.2%. Energy Transfer pays an annual dividend of $1.22 per share and has a dividend yield of 7.8%. USA Compression Partners pays out 1,312.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Energy Transfer pays out 100.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares USA Compression Partners and Energy Transfer’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
USA Compression Partners -0.72% 2.24% 0.84%
Energy Transfer 2.60% 5.50% 1.85%

Valuation and Earnings

This table compares USA Compression Partners and Energy Transfer’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
USA Compression Partners $280.22 million 4.75 $11.44 million $0.16 92.50
Energy Transfer $40.52 billion 0.45 $915.00 million $1.21 12.94

Energy Transfer has higher revenue and earnings than USA Compression Partners. Energy Transfer is trading at a lower price-to-earnings ratio than USA Compression Partners, indicating that it is currently the more affordable of the two stocks.

Summary

Energy Transfer beats USA Compression Partners on 11 of the 15 factors compared between the two stocks.

USA Compression Partners Company Profile

USA Compression Partners, LP provides compression services under term contracts with customers in the natural gas and crude oil industries in the United States. The company engineers, designs, operates, services, and repairs its compression units; and maintains related support inventory and equipment. It also provides compression services in various shale plays, including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales. As of December 31, 2017, the company had approximately 1,799,781 horsepower in its fleet. It serves oil companies; and independent producers, processors, gatherers, and transporters of natural gas and crude oil. USA Compression GP, LLC operates as the general partner of USA Compression Partners, LP. The company was formerly known as Compression Holdings, LP, and changed its name to USA Compression Partners, LP in June 2011. USA Compression Partners, LP was founded in 1998 and is headquartered in Austin, Texas.

Energy Transfer Company Profile

Energy Transfer LP provides diversified energy-related services in the United States. It owns and operates approximately 7,900 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas; and approximately 11,800 miles of interstate natural gas pipelines. The company sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. It owns and operates natural gas and natural gas liquid (NGL) gathering pipelines, as well as natural gas processing plants, treating facilities, and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, and Louisiana; natural gas gathering, oil pipeline, and oil stabilization facilities in South Texas; a natural gas gathering system in Ohio; and transportation and supply of water to natural gas producers in Pennsylvania. The company also owns approximately 4,300 miles of NGL pipelines, 5 NGL and propane fractionation facilities, and NGL storage facilities with aggregate working storage capacity of approximately 53 million barrels. It also sells gasoline, middle distillates, and motor fuel at retail, as well as crude oil, NGLs, and refined products; operates convenience stores; and distributes motor fuels and other petroleum products. The company provides natural gas compression services; treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration, and British thermal unit management services; and manages coal and natural resources properties, as well as sells standing timber, leases coal-related infrastructure facilities, collects oil and gas royalties, and generates a total of 75 megawatts electrical power. The company was formerly known as Energy Transfer Equity, L.P. and changed its name to Energy Transfer LP in October 2018. The company was founded in 2002 and is based in Dallas, Texas.

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