Critical Analysis: Mplx (MPLX) versus Pembina Pipeline (PBA)

Mplx (NYSE: MPLX) and Pembina Pipeline (NYSE:PBA) are both large-cap oils/energy companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Risk and Volatility

Mplx has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500. Comparatively, Pembina Pipeline has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500.

Profitability

This table compares Mplx and Pembina Pipeline’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mplx 17.90% 6.99% 3.70%
Pembina Pipeline 11.66% 8.36% 3.65%

Insider and Institutional Ownership

63.2% of Mplx shares are owned by institutional investors. Comparatively, 45.0% of Pembina Pipeline shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Mplx and Pembina Pipeline’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mplx $3.87 billion 3.89 $794.00 million $1.05 34.49
Pembina Pipeline $3.22 billion 4.93 $351.92 million $0.99 31.89

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

Dividends

Mplx pays an annual dividend of $2.43 per share and has a dividend yield of 6.7%. Pembina Pipeline pays an annual dividend of $1.74 per share and has a dividend yield of 5.5%. Mplx pays out 231.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pembina Pipeline pays out 175.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mplx has increased its dividend for 2 consecutive years and Pembina Pipeline has increased its dividend for 4 consecutive years.

Analyst Ratings

This is a summary of current ratings and price targets for Mplx and Pembina Pipeline, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mplx 0 4 8 0 2.67
Pembina Pipeline 0 1 3 0 2.75

Mplx currently has a consensus target price of $41.70, indicating a potential upside of 15.03%. Given Mplx’s higher probable upside, research analysts plainly believe Mplx is more favorable than Pembina Pipeline.

Summary

Mplx beats Pembina Pipeline on 11 of the 16 factors compared between the two stocks.

Mplx Company Profile

MPLX LP is a master limited partnership (MLP) formed by Marathon Petroleum Corporation (MPC) to own, operate, develop and acquire midstream energy infrastructure assets. The Company is engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of natural gas liquids (NGLs), and the gathering, transportation and storage of crude oil and refined petroleum products. Its segments are Logistics and Storage (L&S), and Gathering and Processing (G&P). The L&S segment includes transportation and storage of crude oil, refined products and other hydrocarbon-based products. As of December 31, 2016, the G&P segment operated various natural gas gathering systems that had a combined 5,439 million cubic feet per day (mmcf/d) throughput capacity. As of December 31, 2016, its assets included infrastructure to support MPC, including approximately 2,900 miles of crude oil and refined product pipelines across nine states.

Pembina Pipeline Company Profile

Pembina Pipeline Corporation is an energy transportation and service provider. The Company operates through four segments. The Conventional Pipelines segment consists of the tariff-based operations of pipelines and related facilities to deliver crude oil, condensate and natural gas liquids (NGL) in Alberta, British Columbia, Saskatchewan, and North Dakota, United States. The Oil Sands & Heavy Oil segment consists of the Syncrude, Horizon, Nipisi and Mitsue Pipelines, and the Cheecham Lateral. These pipelines and related facilities deliver synthetic crude oil produced from oil sands under long-term cost-of-service arrangements. The Gas Services segment consists of natural gas gathering and processing facilities. The Midstream segment consists of the Company’s interests in extraction and fractionation facilities, terminalling and storage hub services under a mixture of short, medium and long-term contractual arrangements.

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