Enbridge Energy Partners (NYSE: EEP) and Summit Midstream (NYSE:SMLP) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, earnings, valuation, institutional ownership, profitability, risk and analyst recommendations.
Volatility & Risk
Enbridge Energy Partners has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, Summit Midstream has a beta of 1.77, suggesting that its stock price is 77% more volatile than the S&P 500.
45.0% of Enbridge Energy Partners shares are held by institutional investors. Comparatively, 50.4% of Summit Midstream shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a summary of recent recommendations and price targets for Enbridge Energy Partners and Summit Midstream, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Enbridge Energy Partners||2||8||0||0||1.80|
Enbridge Energy Partners currently has a consensus price target of $14.20, indicating a potential upside of 44.75%. Summit Midstream has a consensus price target of $21.33, indicating a potential upside of 57.44%. Given Summit Midstream’s stronger consensus rating and higher possible upside, analysts plainly believe Summit Midstream is more favorable than Enbridge Energy Partners.
Valuation & Earnings
This table compares Enbridge Energy Partners and Summit Midstream’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Enbridge Energy Partners||$2.43 billion||1.32||$282.00 million||$0.80||12.26|
|Summit Midstream||$488.74 million||2.07||$85.68 million||$1.64||8.26|
Enbridge Energy Partners has higher revenue and earnings than Summit Midstream. Summit Midstream is trading at a lower price-to-earnings ratio than Enbridge Energy Partners, indicating that it is currently the more affordable of the two stocks.
Enbridge Energy Partners pays an annual dividend of $1.40 per share and has a dividend yield of 14.3%. Summit Midstream pays an annual dividend of $2.30 per share and has a dividend yield of 17.0%. Enbridge Energy Partners pays out 175.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Summit Midstream pays out 140.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Summit Midstream is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Enbridge Energy Partners and Summit Midstream’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Enbridge Energy Partners||9.12%||5.68%||2.15%|
Summit Midstream beats Enbridge Energy Partners on 12 of the 15 factors compared between the two stocks.
Enbridge Energy Partners Company Profile
Enbridge Energy Partners, L.P is a geographically and operationally diversified organization that provides crude oil and liquid petroleum gathering and transportation and storage services. The Company operates through the Liquids business segment. Its Liquids segment includes the operations of its Lakehead, North Dakota and mid-continent systems. The Company’s Lakehead system along with the Enbridge system formed the Mainline system, together formed the liquid petroleum pipeline system, as of December 31, 2016. The Mainline system serves refining centers in the Great Lakes and Midwest regions of the United States and the provinces of Ontario and Quebec, Canada. The Lakehead system is the United States portion of the Mainline system.
Summit Midstream Company Profile
Summit Midstream Partners, LP focuses on owning, developing, and operating midstream energy infrastructure assets primarily shale formations in the continental United States. The company provides natural gas gathering, treating, and processing services, as well as crude oil and produced water gathering services. It operates in five unconventional resource basins, including the Appalachian Basin, which comprises the Utica and Point Pleasant shale formations in southeastern Ohio, and the Marcellus Shale formation in northern West Virginia; the Williston Basin that consists of the Bakken and Three Forks shale formations in northwestern North Dakota; the Fort Worth Basin, which includes the Barnett Shale formation in north-central Texas; the Piceance Basin that comprises the Mesaverde formation, and the Mancos and Niobrara shale formations in western Colorado and eastern Utah; and the Denver-Julesburg Basin, which includes the Niobrara and Codell shale formations in northeastern Colorado. The company serves natural gas and crude oil producers. Summit Midstream GP, LLC operates as a general partner of the company. Summit Midstream Partners, LP was founded in 2009 and is headquartered in The Woodlands, Texas.
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