Plains GP (NYSE: PAGP) and Magellan Midstream Partners (NYSE:MMP) are both oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitability, earnings, dividends and valuation.
Plains GP pays an annual dividend of $1.20 per share and has a dividend yield of 5.6%. Magellan Midstream Partners pays an annual dividend of $3.68 per share and has a dividend yield of 6.5%. Plains GP pays out 184.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Magellan Midstream Partners pays out 96.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Plains GP has raised its dividend for 3 consecutive years and Magellan Midstream Partners has raised its dividend for 8 consecutive years. Magellan Midstream Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares Plains GP and Magellan Midstream Partners’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Plains GP||$26.22 billion||0.13||-$731.00 million||$0.65||32.68|
|Magellan Midstream Partners||$2.51 billion||5.17||$869.53 million||$3.81||14.92|
Magellan Midstream Partners has lower revenue, but higher earnings than Plains GP. Magellan Midstream Partners is trading at a lower price-to-earnings ratio than Plains GP, indicating that it is currently the more affordable of the two stocks.
This table compares Plains GP and Magellan Midstream Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Magellan Midstream Partners||34.67%||40.85%||12.31%|
Institutional & Insider Ownership
84.2% of Plains GP shares are held by institutional investors. Comparatively, 62.2% of Magellan Midstream Partners shares are held by institutional investors. 39.9% of Plains GP shares are held by insiders. Comparatively, 0.3% of Magellan Midstream Partners shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Risk & Volatility
Plains GP has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500. Comparatively, Magellan Midstream Partners has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for Plains GP and Magellan Midstream Partners, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Magellan Midstream Partners||3||7||3||0||2.00|
Plains GP currently has a consensus target price of $26.29, indicating a potential upside of 23.80%. Magellan Midstream Partners has a consensus target price of $75.58, indicating a potential upside of 32.98%. Given Magellan Midstream Partners’ higher possible upside, analysts clearly believe Magellan Midstream Partners is more favorable than Plains GP.
Magellan Midstream Partners beats Plains GP on 10 of the 17 factors compared between the two stocks.
Plains GP Company Profile
Plains GP Holdings, L.P. owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (NGL), natural gas and refined products. The Company operates through three segments: Transportation, Facilities, and Supply and Logistics. Through its three business segments, the Company is engaged in the transportation, storage, terminaling and marketing of crude oil, NGL and natural gas. The Transportation segment operations consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. The Facilities segment operations consist of fee-based activities associated with providing storage, terminaling and throughput services for crude oil, refined products, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. The Supply and Logistics segment operations consist of the merchant-related activities.
Magellan Midstream Partners Company Profile
Magellan Midstream Partners, L.P. engages in the transportation, storage, and distribution of refined petroleum products and crude oil in the United States. The company operates through Refined Products, Crude Oil, and Marine Storage segments. It operates refined products pipeline that transports gasoline, distillates, aviation fuels, and liquefied petroleum gases for independent refiners and integrated oil companies, wholesalers, retailers, traders, railroads, airlines, bio-fuel producers, and regional farm cooperatives; and provides services, including terminalling, ethanol and biodiesel unloading and loading, additive injection, custom blending, laboratory testing, and data services to shippers. The company also owns and operates crude oil pipelines and storage facilities; and marine terminals located along coastal waterways that provide distribution, storage, blending, inventory management, and additive injection services for refiners, marketers, traders, and other end users of petroleum products. As of December 31, 2017, it had 9,700-mile refined products pipeline system with 53 terminals, as well as 26 independent terminals; 1,100-mile ammonia pipeline system; approximately 2,200 miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately 28 million barrels; and 5 marine terminals with an aggregate storage capacity of approximately 26 million barrels. The company serves as the general partner of Magellan GP, LLC. Magellan Midstream Partners, L.P. was founded in 2000 and is headquartered in Tulsa, Oklahoma.
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