EQT Midstream Partners, (NYSE: EQM) and TransCanada Corporation (NYSE:TRP) are both mid-cap oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, risk, analyst recommendations, dividends, institutional ownership and profitabiliy.

Dividends

EQT Midstream Partners, pays an annual dividend of $3.74 per share and has a dividend yield of 5.1%. TransCanada Corporation pays an annual dividend of $1.85 per share and has a dividend yield of 3.7%. EQT Midstream Partners, pays out 72.3% of its earnings in the form of a dividend. TransCanada Corporation pays out 215.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TransCanada Corporation has raised its dividend for 4 consecutive years. EQT Midstream Partners, is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares EQT Midstream Partners, and TransCanada Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
EQT Midstream Partners, $774.18 million 7.64 $623.10 million $5.17 14.20
TransCanada Corporation $11.00 billion 3.97 $5.20 billion $0.86 58.23

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

Insider and Institutional Ownership

75.7% of EQT Midstream Partners, shares are held by institutional investors. Comparatively, 56.1% of TransCanada Corporation shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk and Volatility

EQT Midstream Partners, has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, TransCanada Corporation has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Profitability

This table compares EQT Midstream Partners, and TransCanada Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
EQT Midstream Partners, 66.99% 25.61% 16.75%
TransCanada Corporation 8.16% 12.08% 3.04%

Analyst Ratings

This is a breakdown of recent ratings for EQT Midstream Partners, and TransCanada Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EQT Midstream Partners, 0 3 4 0 2.57
TransCanada Corporation 0 0 9 0 3.00

EQT Midstream Partners, currently has a consensus target price of $91.00, indicating a potential upside of 23.94%. TransCanada Corporation has a consensus target price of $65.21, indicating a potential upside of 30.21%. Given TransCanada Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe TransCanada Corporation is more favorable than EQT Midstream Partners,.

Summary

EQT Midstream Partners, beats TransCanada Corporation on 9 of the 16 factors compared between the two stocks.

EQT Midstream Partners, Company Profile

EQT Midstream Partners, LP (EQM) owns, operates, acquires and develops midstream assets in the Appalachian Basin. The Company’s segments include Gathering and Transmission. The Gathering segment primarily includes high pressure gathering lines and the Federal Energy Regulatory Commission (FERC)-regulated low pressure gathering system. Transmission includes EQM’s FERC-regulated interstate pipeline and storage business. The Company’s operations are primarily focused in southwestern Pennsylvania and northern West Virginia. As of December 31, 2016, the Company provided midstream services to EQT Corporation (EQT) and a range of third parties across 24 counties in Pennsylvania, West Virginia and Ohio through its two assets: the gathering system, which delivered natural gas from wells and other receipt points to transmission pipelines, and the transmission and storage system, which served as a header system transmission pipeline.

TransCanada Corporation Company Profile

TransCanada Corporation is an energy infrastructure company. The Company is engaged in the development and operation of North American energy infrastructure, including natural gas and liquids pipelines, power generation and natural gas storage facilities. Its segments include Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Energy. The Company operates in three businesses: Natural Gas Pipelines, Liquids Pipelines and Energy. The Natural Gas Pipelines and Liquids Pipelines segments principally consist of its respective natural gas and liquids pipelines in Canada, the United States and Mexico, as well as its regulated natural gas storage operations in the United States. The Energy segment includes its power operations and the non-regulated natural gas storage business in Canada. TransCanada PipeLines Limited (TCPL) is its principal operating subsidiary.

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