Analyzing Enterprise Products Partners L.P. (EPD) & Targa Resources (NYSE:TRGP)
Enterprise Products Partners L.P. (NYSE: EPD) and Targa Resources (NYSE:TRGP) are both mid-cap oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their profitabiliy, earnings, dividends, risk, valuation, analyst recommendations and institutional ownership.
Insider and Institutional Ownership
38.6% of Enterprise Products Partners L.P. shares are held by institutional investors. Comparatively, 79.9% of Targa Resources shares are held by institutional investors. 37.5% of Enterprise Products Partners L.P. shares are held by insiders. Comparatively, 1.9% of Targa Resources shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
This is a summary of recent ratings and recommmendations for Enterprise Products Partners L.P. and Targa Resources, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Enterprise Products Partners L.P.||0||0||17||0||3.00|
Enterprise Products Partners L.P. presently has a consensus target price of $32.03, suggesting a potential upside of 17.29%. Targa Resources has a consensus target price of $56.82, suggesting a potential upside of 25.72%. Given Targa Resources’ higher probable upside, analysts clearly believe Targa Resources is more favorable than Enterprise Products Partners L.P..
This table compares Enterprise Products Partners L.P. and Targa Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Enterprise Products Partners L.P.||10.31%||11.73%||5.06%|
Volatility and Risk
Enterprise Products Partners L.P. has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, Targa Resources has a beta of 2.21, meaning that its share price is 121% more volatile than the S&P 500.
Enterprise Products Partners L.P. pays an annual dividend of $1.66 per share and has a dividend yield of 6.1%. Targa Resources pays an annual dividend of $3.64 per share and has a dividend yield of 8.1%. Enterprise Products Partners L.P. pays out 133.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Enterprise Products Partners L.P. has increased its dividend for 13 consecutive years and Targa Resources has increased its dividend for 18 consecutive years. Targa Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares Enterprise Products Partners L.P. and Targa Resources’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Enterprise Products Partners L.P.||$25.34 billion||2.30||$4.98 billion||$1.24||22.02|
|Targa Resources||$7.36 billion||1.22||$1.04 billion||N/A||N/A|
Enterprise Products Partners L.P. has higher revenue and earnings than Targa Resources.
Enterprise Products Partners L.P. beats Targa Resources on 9 of the 17 factors compared between the two stocks.
Enterprise Products Partners L.P. Company Profile
Enterprise Products Partners L.P. (Enterprise) is a provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals and refined products in North America. The Company’s segments include NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services. The Company’s midstream energy operations include natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage, and import and export terminals, including liquefied petroleum gas (LPG); crude oil gathering, transportation, storage and terminals; petrochemical and refined products transportation, storage, export and import terminals, and related services, and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems.
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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