Contrasting Royal Dutch Shell (RDS.B) & EQT GP (EQGP)

Royal Dutch Shell (NYSE: RDS.B) and EQT GP (NYSE:EQGP) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

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5.2% of Royal Dutch Shell shares are owned by institutional investors. Comparatively, 10.1% of EQT GP shares are owned by institutional investors. 1.0% of Royal Dutch Shell shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Royal Dutch Shell and EQT GP, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Dutch Shell 0 1 0 0 2.00
EQT GP 0 8 4 0 2.33

EQT GP has a consensus target price of $31.30, suggesting a potential upside of 39.67%. Given EQT GP’s stronger consensus rating and higher possible upside, analysts clearly believe EQT GP is more favorable than Royal Dutch Shell.

Volatility and Risk

Royal Dutch Shell has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, EQT GP has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.

Dividends

Royal Dutch Shell pays an annual dividend of $3.76 per share and has a dividend yield of 5.9%. EQT GP pays an annual dividend of $0.98 per share and has a dividend yield of 4.4%. Royal Dutch Shell pays out 119.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EQT GP pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EQT GP has raised its dividend for 2 consecutive years.

Profitability

This table compares Royal Dutch Shell and EQT GP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Dutch Shell 4.22% 7.84% 3.75%
EQT GP 31.41% 12.52% 7.89%

Earnings & Valuation

This table compares Royal Dutch Shell and EQT GP’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Royal Dutch Shell $305.18 billion 0.87 $12.98 billion $3.14 20.20
EQT GP $834.10 million 7.15 $261.99 million $0.98 22.87

Royal Dutch Shell has higher revenue and earnings than EQT GP. Royal Dutch Shell is trading at a lower price-to-earnings ratio than EQT GP, indicating that it is currently the more affordable of the two stocks.

Summary

EQT GP beats Royal Dutch Shell on 12 of the 17 factors compared between the two stocks.

About Royal Dutch Shell

The Royal Dutch Shell plc explores for crude oil and natural gas around the world, both in conventional fields and from sources, such as tight rock, shale and coal formations. The Company’s segments include Integrated Gas, Upstream, Downstream and Corporate. The Integrated Gas segment is engaged in the liquefaction and transportation of gas and the conversion of natural gas to liquids to provide fuels and other products, as well as projects with an integrated activity, ranging from producing to commercializing gas. The Upstream segment includes the operations of Upstream, which is engaged in the exploration for and extraction of crude oil, natural gas and natural gas liquids, and the marketing and transportation of oil and gas, and Oil Sands, which is engaged in the extraction of bitumen from mined oil sands and conversion into synthetic crude oil. The Downstream segment is engaged in oil products and chemicals manufacturing, and marketing activities.

About EQT GP

EQT GP Holdings, LP (EQGP) is a limited partnership company and subsidiary of EQT Gathering Holdings, LLC (EQT Gathering Holdings). The Company was formed to own EQT Corporation’s (EQT’s) partnership interests in EQT Midstream Partners, LP (EQM), a limited partnership formed by EQT to own, operate, acquire and develop midstream assets in the Appalachian Basin. Its segments include Gathering, and Transmission. The Gathering segment primarily includes high pressure gathering lines and the Federal Energy Regulatory Commission (FERC)-regulated low pressure gathering system. The Transmission segment includes EQM’s FERC-regulated interstate pipeline and storage business. EQGP has no independent operations. It has partnership interests in EQM. As of December 31, 2016, EQM provided midstream services to EQT and various third parties across 24 counties in Pennsylvania, West Virginia and Ohio through its two primary assets: the gathering system, and the transmission and storage system.

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