Noble Midstream Partners (NYSE: NBLX) and Targa Resources (NYSE:TRGP) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Profitability

This table compares Noble Midstream Partners and Targa Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Noble Midstream Partners 50.57% 31.64% 24.40%
Targa Resources -2.92% -0.64% -0.29%

Institutional & Insider Ownership

84.1% of Noble Midstream Partners shares are held by institutional investors. Comparatively, 87.9% of Targa Resources shares are held by institutional investors. 1.9% of Targa Resources shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Noble Midstream Partners and Targa Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Noble Midstream Partners $203.73 million 4.70 $150.22 million $2.65 18.04
Targa Resources $7.65 billion 1.28 $1.02 billion ($1.98) -23.00

Targa Resources has higher revenue and earnings than Noble Midstream Partners. Targa Resources is trading at a lower price-to-earnings ratio than Noble Midstream Partners, indicating that it is currently the more affordable of the two stocks.

Dividends

Noble Midstream Partners pays an annual dividend of $1.78 per share and has a dividend yield of 3.7%. Targa Resources pays an annual dividend of $3.64 per share and has a dividend yield of 8.0%. Noble Midstream Partners pays out 67.2% of its earnings in the form of a dividend. Targa Resources pays out -183.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Targa Resources has increased its dividend for 6 consecutive years. Targa Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations for Noble Midstream Partners and Targa Resources, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noble Midstream Partners 0 2 10 0 2.83
Targa Resources 0 5 11 1 2.76

Noble Midstream Partners presently has a consensus target price of $43.70, suggesting a potential downside of 8.58%. Targa Resources has a consensus target price of $54.31, suggesting a potential upside of 19.24%. Given Targa Resources’ higher probable upside, analysts plainly believe Targa Resources is more favorable than Noble Midstream Partners.

Summary

Targa Resources beats Noble Midstream Partners on 10 of the 16 factors compared between the two stocks.

Noble Midstream Partners Company Profile

Noble Midstream Partners LP is engaged in owning, operating, developing and acquiring a range of domestic midstream infrastructure assets. The Company’s areas of focus are in the area of Denver-Julesburg (DJ) Basin in Colorado and the Southern Delaware Basin position of the Permian Basin in Texas (Delaware Basin). Its segments include Gathering Systems, Fresh Water Delivery, and Investments in White Cliffs and Other. The Gathering Systems segment includes crude oil, natural gas and produced water gathering, as well as crude oil treating. It holds interest in White Cliffs Pipeline L.L.C. (the White Cliffs Interest). The Investments in White Cliffs and Other segment includes activity associated with the White Cliffs Interest. As of December 31, 2016, the White Cliffs Pipeline system consisted of two 527-mile crude oil pipelines that extended from the DJ Basin to the Cushing, Oklahoma. It provides crude oil, natural gas, and water-related midstream services for Noble Energy, Inc.

Targa Resources Company Profile

Targa Resources Corp. is a midstream energy company in North America. It provides midstream services. Its segments include Gathering and Processing, and Logistics and Marketing (Downstream Business). It is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling natural gas liquids (NGLs) and NGL products, including services to liquefied petroleum gas exporters; gathering, storing and terminalling crude oil, and storing, terminalling and selling refined petroleum products. The Gathering and Processing segment consists of gathering, compressing, dehydrating, treating, conditioning, processing, and marketing natural gas and gathering crude oil. The Logistics and Marketing segment includes all the activities necessary to convert mixed NGLs into NGL products and provides certain services, such as storing, fractionating, terminalling, transporting and marketing of NGLs and NGL products.

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