Head to Head Comparison: Shell Midstream Partners (SHLX) and Targa Resources (TRGP)
Shell Midstream Partners (NYSE: SHLX) and Targa Resources (NYSE:TRGP) are both energy companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, valuation, analyst recommendations, institutional ownership, profitability and earnings.
Volatility & Risk
Shell Midstream Partners has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Targa Resources has a beta of 2.05, meaning that its stock price is 105% more volatile than the S&P 500.
Shell Midstream Partners pays an annual dividend of $1.33 per share and has a dividend yield of 5.2%. Targa Resources pays an annual dividend of $3.64 per share and has a dividend yield of 7.7%. Shell Midstream Partners pays out 103.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Targa Resources pays out -224.7% of its earnings in the form of a dividend. Targa Resources has increased its dividend for 2 consecutive years. Targa Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares Shell Midstream Partners and Targa Resources’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Shell Midstream Partners||$470.10 million||12.09||$372.60 million||$1.28||19.84|
|Targa Resources||$8.81 billion||1.17||$54.00 million||($1.62)||-29.10|
Shell Midstream Partners has higher earnings, but lower revenue than Targa Resources. Targa Resources is trading at a lower price-to-earnings ratio than Shell Midstream Partners, indicating that it is currently the more affordable of the two stocks.
This table compares Shell Midstream Partners and Targa Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Shell Midstream Partners||78.08%||-179.87%||26.36%|
This is a breakdown of current recommendations for Shell Midstream Partners and Targa Resources, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Shell Midstream Partners||0||3||3||0||2.50|
Shell Midstream Partners presently has a consensus target price of $30.67, indicating a potential upside of 20.73%. Targa Resources has a consensus target price of $54.13, indicating a potential upside of 14.82%. Given Shell Midstream Partners’ higher probable upside, research analysts plainly believe Shell Midstream Partners is more favorable than Targa Resources.
Insider & Institutional Ownership
45.0% of Shell Midstream Partners shares are held by institutional investors. Comparatively, 90.3% of Targa Resources shares are held by institutional investors. 1.9% of Targa Resources shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Targa Resources beats Shell Midstream Partners on 11 of the 18 factors compared between the two stocks.
Shell Midstream Partners Company Profile
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.
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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