Martin Midstream Partners (NASDAQ: MMLP) and Sprague Resources (NYSE:SRLP) are both small-cap transportation companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Dividends

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Martin Midstream Partners pays an annual dividend of $2.00 per share and has a dividend yield of 13.8%. Sprague Resources pays an annual dividend of $2.55 per share and has a dividend yield of 10.8%. Martin Midstream Partners pays out 454.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sprague Resources pays out 225.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sprague Resources has raised its dividend for 3 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Martin Midstream Partners and Sprague Resources, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Martin Midstream Partners 0 3 2 0 2.40
Sprague Resources 1 0 1 0 2.00

Martin Midstream Partners presently has a consensus price target of $18.00, indicating a potential upside of 24.57%. Sprague Resources has a consensus price target of $27.00, indicating a potential upside of 13.92%. Given Martin Midstream Partners’ stronger consensus rating and higher probable upside, equities analysts plainly believe Martin Midstream Partners is more favorable than Sprague Resources.

Volatility and Risk

Martin Midstream Partners has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500. Comparatively, Sprague Resources has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Martin Midstream Partners 1.81% 8.22% 2.14%
Sprague Resources 1.00% 17.44% 2.73%

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Martin Midstream Partners $946.11 million 0.59 $17.13 million $0.44 32.84
Sprague Resources $2.86 billion 0.19 $29.49 million $1.13 20.97

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

Insider and Institutional Ownership

36.6% of Martin Midstream Partners shares are held by institutional investors. Comparatively, 21.9% of Sprague Resources shares are held by institutional investors. 17.0% of Martin Midstream Partners shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Martin Midstream Partners beats Sprague Resources on 10 of the 17 factors compared between the two stocks.

About Martin Midstream Partners

Martin Midstream Partners L.P. is a limited partnership with a set of operations focused in the United States Gulf Coast region. The Company’s four business lines include terminalling and storage services for petroleum products and by-products, including the refining of naphthenic crude oil and the blending and packaging of finished lubricants; natural gas services, including liquids transportation and distribution services, and natural gas storage; sulfur and sulfur-based products processing, manufacturing, marketing and distribution, and marine transportation services for petroleum products and by-products. The petroleum products and by-products it collects, transports, stores and markets are produced by oil and gas companies. As of December 31, 2016, it operated 26 marine shore-based terminal facilities and 14 specialty terminal facilities located in the United States Gulf Coast region. Its customers include oil and gas companies, chemical companies and fertilizer manufacturers.

About Sprague Resources

Sprague Resources LP is engaged in the purchase, storage, distribution and sale of refined products and natural gas, and provides storage and handling services for a range of materials. The Company operates through four segments: refined products, which purchases a range of refined products, such as heating oil, diesel fuel, residual fuel oil, asphalt, kerosene, jet fuel and gasoline from refining companies, trading organizations and producers; natural gas, which purchases natural gas from natural gas producers and trading companies, and sells and distributes natural gas to commercial and industrial customers in the Northeast and Mid-Atlantic United States; materials handling, which offloads, stores and prepares for delivery a range of customer-owned products, including asphalt, clay slurry, coal and heavy equipment, and other operations, which include the purchase and distribution of coal, certain commercial trucking activities and the heating equipment service business.

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