Head to Head Review: Sunoco (SUN) versus EnLink Midstream (ENLC)

Sunoco (NYSE: SUN) and EnLink Midstream (NYSE:ENLC) are both mid-cap oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, risk, dividends, earnings and valuation.

Analyst Ratings

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This is a summary of current ratings and target prices for Sunoco and EnLink Midstream, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sunoco 2 6 5 0 2.23
EnLink Midstream 0 12 1 0 2.08

Sunoco currently has a consensus price target of $31.23, indicating a potential upside of 18.56%. EnLink Midstream has a consensus price target of $17.92, indicating a potential upside of 23.56%. Given EnLink Midstream’s higher probable upside, analysts clearly believe EnLink Midstream is more favorable than Sunoco.

Profitability

This table compares Sunoco and EnLink Midstream’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sunoco 1.27% 17.06% 3.94%
EnLink Midstream 3.71% 0.23% 0.12%

Insider & Institutional Ownership

30.0% of Sunoco shares are held by institutional investors. Comparatively, 33.7% of EnLink Midstream shares are held by institutional investors. 1.2% of EnLink Midstream shares are held by insiders. 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.

Dividends

Sunoco pays an annual dividend of $3.30 per share and has a dividend yield of 12.5%. EnLink Midstream pays an annual dividend of $1.04 per share and has a dividend yield of 7.2%. Sunoco pays out -41.3% of its earnings in the form of a dividend. EnLink Midstream pays out 89.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sunoco has raised its dividend for 2 consecutive years. Sunoco is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Sunoco and EnLink Midstream’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sunoco $11.72 billion 0.22 $149.00 million ($7.99) -3.30
EnLink Midstream $5.74 billion 0.46 $212.80 million $1.16 12.50

EnLink Midstream has lower revenue, but higher earnings than Sunoco. Sunoco is trading at a lower price-to-earnings ratio than EnLink Midstream, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Sunoco has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, EnLink Midstream has a beta of 2.58, suggesting that its stock price is 158% more volatile than the S&P 500.

Summary

EnLink Midstream beats Sunoco on 9 of the 17 factors compared between the two stocks.

About Sunoco

Sunoco LP is engaged in the retail sale of motor fuels and merchandise through its Company-operated convenience stores and retail fuel sites, as well as the wholesale distribution of motor fuels to convenience stores, independent dealers, commercial customers and distributors. The Company operates through two segments: wholesale and retail. The Wholesale segment sells motor fuel to its retail segment and external customers. The Retail segment operates convenience stores selling a range of merchandise, food items, services and motor fuel. As of December 31, 2016, the Company operated approximately 1,345 convenience stores and fuel outlets in over 20 states, offering merchandise, food service, motor fuel and other services.

About EnLink Midstream

EnLink Midstream, LLC focuses on providing midstream energy services in the United States. It operates through five segments: Texas, Oklahoma, Louisiana, Crude and Condensate, and Corporate. The company is involved in gathering, compressing, treating, processing, transporting, storing, and selling natural gas; fractionating, transporting, storing, exporting, and selling natural gas liquids; and gathering, transporting, stabilizing, storing, and trans-loading crude oil, and condensate. Its midstream energy asset network includes approximately 11,000 miles of pipelines; 20 natural gas processing plants; 7 fractionators; barge and rail terminals; product storage facilities; brine disposal wells; and a crude oil trucking fleet. The company was founded in 2013 and is headquartered in Dallas, Texas. EnLink Midstream, LLC is a subsidiary of Devon Energy Corporation.

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