Critical Comparison: Arc Resources (OTCMKTS:AETUF) versus Delek Logistics Partners (NYSE:DKL)

Delek Logistics Partners (NYSE:DKL) and Arc Resources (OTCMKTS:AETUF) are both energy companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.

Insider and Institutional Ownership

11.7% of Delek Logistics Partners shares are held by institutional investors. Comparatively, 2.5% of Arc Resources shares are held by institutional investors. 1.0% of Delek Logistics Partners shares are held by insiders. Comparatively, 0.3% of Arc Resources shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Delek Logistics Partners and Arc Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Delek Logistics Partners	12.85%	-935.80%	5.45%
Arc Resources	19.75%	16.67%	9.09%

Dividends

Delek Logistics Partners pays an annual dividend of $4.54 per share and has a dividend yield of 8.3%. Arc Resources pays an annual dividend of $0.59 per share and has a dividend yield of 2.4%. Delek Logistics Partners pays out 158.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arc Resources pays out 33.0% of its earnings in the form of a dividend. Delek Logistics Partners has raised its dividend for 1 consecutive years. Delek Logistics Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Delek Logistics Partners and Arc Resources, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Delek Logistics Partners	0	6	1	0	2.14
Arc Resources	1	10	3	0	2.14

Delek Logistics Partners presently has a consensus price target of $55.60, indicating a potential upside of 1.36%. Given Delek Logistics Partners’ higher possible upside, analysts plainly believe Delek Logistics Partners is more favorable than Arc Resources.

Risk and Volatility

Delek Logistics Partners has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500. Comparatively, Arc Resources has a beta of 0.27, indicating that its stock price is 73% less volatile than the S&P 500.

Valuation & Earnings

This table compares Delek Logistics Partners and Arc Resources”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Delek Logistics Partners	$1.20 billion	2.62	$176.46 million	$2.87	19.11
Arc Resources	$4.35 billion	3.20	$912.59 million	$1.79	13.71

Arc Resources has higher revenue and earnings than Delek Logistics Partners. Arc Resources is trading at a lower price-to-earnings ratio than Delek Logistics Partners, indicating that it is currently the more affordable of the two stocks.

About Delek Logistics Partners

Delek Logistics Partners, LP provides gathering, pipeline, transportation, and other services for crude oil, intermediates, refined products, natural gas, storage, wholesale marketing, terminalling water disposal and recycling customers in the United States. The Gathering and Processing segment consists of pipelines, tanks, and offloading facilities that provide crude oil and natural gas gathering and processing, water disposal and recycling, and storage services, as well as crude oil transportation services to third parties. The Wholesale Marketing and Terminalling segment includes refined products terminals and pipelines in Texas, Tennessee, and Arkansas. This segment provides marketing services for the refined products and terminalling services at refined products terminals to independent third parties. The Storage and Transportation segment comprises tanks, offloading facilities, trucks, and ancillary assets, which provide crude oil, intermediate, and refined products transportation and storage services. Delek Logistics GP, LLC serves as the general partner of the company. Delek Logistics Partners, LP was incorporated in 2012 and is headquartered in Brentwood, Tennessee. Delek Logistics Partners, LP operates as a subsidiary of Delek US Holdings, Inc.

About Arc Resources

ARC Resources Ltd. engages in the acquiring and developing crude oil, natural gas, condensate, and natural gas liquids in Canada. It primarily holds interests in the Montney basin located in Alberta and northeast British Columbia. ARC Resources Ltd. was founded in 1996 and is based in Calgary, Canada.