Critical Analysis: Golar LNG Partners (GMLP) versus Marathon Petroleum (MPC)

Golar LNG Partners (NASDAQ: GMLP) and Marathon Petroleum (NYSE:MPC) are both oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, risk and dividends.

Profitability

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This table compares Golar LNG Partners and Marathon Petroleum’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Golar LNG Partners 29.85% 17.19% 5.43%
Marathon Petroleum 4.60% 9.90% 4.23%

Earnings and Valuation

This table compares Golar LNG Partners and Marathon Petroleum’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Golar LNG Partners $433.10 million 2.84 $129.28 million $1.87 9.23
Marathon Petroleum $75.37 billion 0.46 $3.43 billion $6.92 10.62

Marathon Petroleum has higher revenue and earnings than Golar LNG Partners. Golar LNG Partners is trading at a lower price-to-earnings ratio than Marathon Petroleum, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Golar LNG Partners has a beta of 0.92, indicating that its stock price is 8% less volatile than the S&P 500. Comparatively, Marathon Petroleum has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500.

Dividends

Golar LNG Partners pays an annual dividend of $2.31 per share and has a dividend yield of 13.4%. Marathon Petroleum pays an annual dividend of $1.84 per share and has a dividend yield of 2.5%. Golar LNG Partners pays out 123.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Marathon Petroleum pays out 26.6% of its earnings in the form of a dividend. Marathon Petroleum has raised its dividend for 7 consecutive years.

Analyst Ratings

This is a summary of current ratings and recommmendations for Golar LNG Partners and Marathon Petroleum, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Golar LNG Partners 0 2 4 0 2.67
Marathon Petroleum 0 4 11 0 2.73

Golar LNG Partners currently has a consensus price target of $23.60, indicating a potential upside of 36.73%. Marathon Petroleum has a consensus price target of $81.25, indicating a potential upside of 10.60%. Given Golar LNG Partners’ higher probable upside, equities analysts clearly believe Golar LNG Partners is more favorable than Marathon Petroleum.

Insider & Institutional Ownership

44.0% of Golar LNG Partners shares are owned by institutional investors. Comparatively, 80.3% of Marathon Petroleum shares are owned by institutional investors. 1.1% of Marathon Petroleum shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Marathon Petroleum beats Golar LNG Partners on 11 of the 17 factors compared between the two stocks.

About Golar LNG Partners

Golar LNG Partners LP owns and operates floating storage regasification units (FSRUs) and liquefied natural gas (LNG) carriers under long-term time charters. The Company operates through the LNG market segment. The Company’s fleet consists of approximately six FSRUs and over four LNG carriers. The Company’s FSRU vessels include Golar Spirit, Golar Winter, Golar Freeze, NR Satu, Golar Igloo and Golar Eskimo. Its FSRU vessels have a total capacity of approximately 846,000 cubic meters. The Company’s LNG carriers include Golar Mazo, Methane Princess, Golar Grand and Golar Maria. Its LNG carriers have a total capacity of over 564,400 cubic meters.

About Marathon Petroleum

Marathon Petroleum Corporation is engaged in refining, marketing, retail and transportation businesses in the United States and the largest east of the Mississippi. The Company operates through three segments: Refining & Marketing; Speedway; and Midstream. The Refining & Marketing segment refines crude oil and other feedstocks at the Company’s seven refineries in the Gulf Coast and Midwest regions of the United States. Its Speedway segment sells transportation fuels and convenience products in the retail market in the Midwest, East Coast and Southeast regions of the United States. The Company’s Midstream is engaged in the operations of MPLX LP and certain other related operations. It gathers, processes and transports natural gas, natural gas liquids (NGLs), crude oil and refined products. MPLX is a limited partnership which owns, operates, develops and acquires midstream energy infrastructure assets.

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