Shell Midstream Partners, L.P. (NYSE: SHLX) and Semgroup Corporation (NYSE:SEMG) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Analyst Recommendations

This is a breakdown of current ratings for Shell Midstream Partners, L.P. and Semgroup Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shell Midstream Partners, L.P. 0 1 4 0 2.80
Semgroup Corporation 0 4 2 0 2.33

Shell Midstream Partners, L.P. presently has a consensus target price of $36.00, indicating a potential upside of 37.04%. Semgroup Corporation has a consensus target price of $34.00, indicating a potential upside of 45.61%. Given Semgroup Corporation’s higher probable upside, analysts clearly believe Semgroup Corporation is more favorable than Shell Midstream Partners, L.P..

Volatility & Risk

Shell Midstream Partners, L.P. has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500. Comparatively, Semgroup Corporation has a beta of 2.03, suggesting that its share price is 103% more volatile than the S&P 500.

Insider and Institutional Ownership

45.9% of Shell Midstream Partners, L.P. shares are owned by institutional investors. Comparatively, 84.8% of Semgroup Corporation shares are owned by institutional investors. 0.8% of Semgroup Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Shell Midstream Partners, L.P. and Semgroup Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Shell Midstream Partners, L.P. $283.50 million 16.44 $160.60 million $1.24 21.19
Semgroup Corporation $1.66 billion 1.11 $147.28 million $0.03 778.33

Shell Midstream Partners, L.P. has higher revenue, but lower earnings than Semgroup Corporation. Shell Midstream Partners, L.P. is trading at a lower price-to-earnings ratio than Semgroup Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Shell Midstream Partners, L.P. and Semgroup Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shell Midstream Partners, L.P. 87.22% 258.67% 28.64%
Semgroup Corporation 0.24% 3.46% 1.60%

Dividends

Shell Midstream Partners, L.P. pays an annual dividend of $1.22 per share and has a dividend yield of 4.6%. Semgroup Corporation pays an annual dividend of $1.80 per share and has a dividend yield of 7.7%. Shell Midstream Partners, L.P. pays out 98.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Semgroup Corporation pays out 6,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners, L.P. has raised its dividend for 3 consecutive years.

Summary

Shell Midstream Partners, L.P. beats Semgroup Corporation on 10 of the 17 factors compared between the two stocks.

About Shell Midstream Partners, L.P.

Shell Midstream Partners, L.P. is a master limited partnership company, which owns, operates, develops and acquires pipelines and other midstream assets. The Company conducts its operations through its subsidiary, Shell Midstream Operating, LLC. Its assets consist of interests in entities that own crude oil and refined products pipelines serving as key infrastructure to transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and to deliver refined products from those markets to demand centers. As of December 31, 2016, it owned interests in seven crude oil pipeline systems, three refined products systems, one natural gas gathering pipeline system and a crude tank storage and terminal system. Its pipeline and terminal systems include Zydeco crude oil system, Auger crude oil system, Mars crude oil system, Bengal product system, Poseidon crude oil system, Odyssey crude oil system, Proteus crude oil system and Endymion crude oil system.

About Semgroup Corporation

SemGroup Corporation is a provider of gathering, transportation, storage, distribution, marketing and other midstream services to producers, refiners of petroleum products and other market participants located in the Midwest and Rocky Mountain regions of the United States and Canada. The Company’s segments include Crude Transportation, which operates crude oil pipelines and truck transportation businesses in the United States; Crude Facilities, which operates crude oil storage and terminal businesses in the United States; Crude Supply and Logistics, which operates a crude oil marketing business; SemGas, which provides natural gas gathering and processing services; SemCAMS, which operates natural gas processing and gathering facilities in Alberta, Canada; SemLogistics, which owns petroleum products storage facility in the United Kingdom, and SemMexico, which provides liquid asphalt cement products and product application services to the Mexican market, and Corporate and Other.

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