Analyzing Western Midstream Partners (NYSE:WES) and Cenovus Energy (NYSE:CVE)

Cenovus Energy (NYSE:CVE) and Western Midstream Partners (NYSE:WES) are both large-cap energy companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Risk & Volatility

Cenovus Energy has a beta of 0.35, meaning that its stock price is 65% less volatile than the S&P 500. Comparatively, Western Midstream Partners has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Cenovus Energy and Western Midstream Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cenovus Energy	0	2	12	1	2.93
Western Midstream Partners	0	6	3	2	2.64

Cenovus Energy currently has a consensus price target of $39.00, indicating a potential upside of 23.79%. Western Midstream Partners has a consensus price target of $49.89, indicating a potential upside of 10.03%. Given Cenovus Energy’s stronger consensus rating and higher possible upside, equities analysts clearly believe Cenovus Energy is more favorable than Western Midstream Partners.

Dividends

Cenovus Energy pays an annual dividend of $0.64 per share and has a dividend yield of 2.0%. Western Midstream Partners pays an annual dividend of $3.72 per share and has a dividend yield of 8.2%. Cenovus Energy pays out 24.6% of its earnings in the form of a dividend. Western Midstream Partners pays out 117.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cenovus Energy has increased its dividend for 4 consecutive years and Western Midstream Partners has increased its dividend for 5 consecutive years. Western Midstream Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

51.2% of Cenovus Energy shares are owned by institutional investors. Comparatively, 84.8% of Western Midstream Partners shares are owned by institutional investors. 0.0% of Western Midstream Partners shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Cenovus Energy and Western Midstream Partners”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cenovus Energy	$35.57 billion	1.63	$2.81 billion	$2.60	12.12
Western Midstream Partners	$3.84 billion	4.87	$1.18 billion	$3.18	14.26

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

Profitability

This table compares Cenovus Energy and Western Midstream Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cenovus Energy	12.37%	21.08%	10.80%
Western Midstream Partners	29.44%	33.13%	8.74%

Summary

Western Midstream Partners beats Cenovus Energy on 11 of the 18 factors compared between the two stocks.

About Cenovus Energy

Cenovus Energy Inc., together with its subsidiaries, develops, produces, refines, transports, and markets crude oil, natural gas, and refined petroleum products in Canada and internationally. The company operates through Oil Sands, Conventional, Offshore, Canadian Refining, and U.S. Refining segments. The Oil Sands segment develops and produces bitumen and heavy oil in northern Alberta and Saskatchewan. This segment assets include Foster Creek, Christina Lake, and Sunrise projects, as well as Lloydminster thermal and conventional heavy oil assets. The Conventional segment holds natural gas liquids and natural gas assets primarily located in Elmworth-Wapiti, Kaybob-Edson, Clearwater, and Rainbow Lake operating in Alberta and British Columbia, as well as interests in various natural gas processing facilities. The offshore segment engages in offshore operation, exploration, and development activities in China and the East Coast of Canada. The Canadian Refining segment owns and operates Lloydminster upgrading and asphalt refining complex, which converts heavy oil and bitumen into synthetic crude oil, diesel, asphalt, and other ancillary products, as well as Bruderheim crude-by-rail terminal and ethanol plants. The U.S. Refining segment refines crude oil to produce gasoline, diesel, jet fuel, asphalt, and other products. Cenovus Energy Inc. is headquartered in Calgary, Canada.

About Western Midstream Partners

Western Midstream Partners, LP, together with its subsidiaries, operates as a midstream energy company primarily in the United States. It is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing produced water. The company also buys and sells natural gas, NGLs, and condensate. It operates assets located in Texas, New Mexico, the Rocky Mountains, and North-central Pennsylvania. Western Midstream Holdings, LLC operates as the general partner of the company. The company was formerly known as Western Gas Equity Partners, LP and changed its name to Western Midstream Partners, LP in February 2019. Western Midstream Partners, LP was incorporated in 2007 and is based in The Woodlands, Texas.