JP Energy Partners (JPEP) versus WGL Holdings (NYSE:WGL) Critical Review
JP Energy Partners (NYSE: JPEP) and WGL Holdings (NYSE:WGL) are both utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their profitabiliy, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.
JP Energy Partners pays an annual dividend of $1.30 per share and has a dividend yield of 13.8%. WGL Holdings pays an annual dividend of $2.04 per share and has a dividend yield of 2.4%. JP Energy Partners pays out -81.8% of its earnings in the form of a dividend. WGL Holdings pays out 60.2% 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. JP Energy Partners has increased its dividend for 40 consecutive years. JP Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares JP Energy Partners and WGL Holdings’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|JP Energy Partners||-5.61%||-5.99%||-4.01%|
This is a breakdown of current ratings and target prices for JP Energy Partners and WGL Holdings, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|JP Energy Partners||0||1||1||0||2.50|
JP Energy Partners currently has a consensus target price of $11.00, indicating a potential upside of 16.53%. WGL Holdings has a consensus target price of $71.00, indicating a potential downside of 16.65%. Given JP Energy Partners’ stronger consensus rating and higher possible upside, equities research analysts plainly believe JP Energy Partners is more favorable than WGL Holdings.
Insider & Institutional Ownership
53.4% of JP Energy Partners shares are owned by institutional investors. Comparatively, 68.0% of WGL Holdings shares are owned by institutional investors. 1.0% of WGL Holdings shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Earnings and Valuation
This table compares JP Energy Partners and WGL Holdings’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|JP Energy Partners||N/A||N/A||N/A||($1.59)||-5.94|
|WGL Holdings||$2.35 billion||1.86||$451.36 million||$3.39||25.13|
WGL Holdings has higher revenue and earnings than JP Energy Partners. JP Energy Partners is trading at a lower price-to-earnings ratio than WGL Holdings, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
JP Energy Partners has a beta of 3.3, meaning that its stock price is 230% more volatile than the S&P 500. Comparatively, WGL Holdings has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500.
About JP Energy Partners
JP Energy Partners LP owns, operates, develops and acquires a portfolio of midstream energy assets. The Company provides midstream infrastructure solutions for the supply of crude oil, refined products and natural gas liquids (NGLs) in the United States. The Company’s segments include crude oil pipelines and storage, refined products terminals and storage, and NGL distribution and sales. The Company’s crude oil businesses are situated in areas, including the Permian Basin and Eagle Ford shale. Its crude oil pipelines and storage segment manages the physical movement of crude oil from origination to final destination through its network of owned and leased assets. Its refined product terminals and storage segment consists of approximately two refined products terminals located in North Little Rock, Arkansas and Caddo Mills, Texas. The Company’s NGL distribution and sales segment involves the retail, commercial and wholesale sale of NGLs and other refined products.
About WGL Holdings
WGL Holdings, Inc. (WGL) is a holding company. The Company operates through four segments. The Regulated Utility segment consists of Washington Gas Light Company, which provides regulated gas distribution services to end use customers and natural gas transportation services to an unaffiliated natural gas distribution company and Hampshire Gas Company, which provides regulated interstate natural gas storage services. The Retail Energy-Marketing segment consists of the operations of WGL Energy Services, Inc., which sells natural gas and electricity directly to retail customers. The Commercial Energy Systems segment consists of the operations of WGL Energy Systems, Inc., WGSW, Inc. and the results of operations of affiliate-owned commercial distributed energy projects. The Midstream Energy Services segment consists of the operations of WGL Midstream, Inc., which engages in acquiring, investing in, managing and optimizing natural gas storage and transportation assets.
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