Southcross Energy Partners, L.P. (NYSE: SXE) and Kinder Morgan (NYSE:KMI) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, analyst recommendations, institutional ownership, risk and valuation.

Institutional and Insider Ownership

3.0% of Southcross Energy Partners, L.P. shares are owned by institutional investors. Comparatively, 57.4% of Kinder Morgan shares are owned by institutional investors. 23.8% of Southcross Energy Partners, L.P. shares are owned by insiders. Comparatively, 14.0% of Kinder Morgan shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Southcross Energy Partners, L.P. and Kinder Morgan’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southcross Energy Partners, L.P. -16.46% -18.51% -8.84%
Kinder Morgan 6.20% 4.41% 1.93%

Volatility & Risk

Southcross Energy Partners, L.P. has a beta of 4.17, meaning that its share price is 317% more volatile than the S&P 500. Comparatively, Kinder Morgan has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.

Dividends

Kinder Morgan pays an annual dividend of $0.50 per share and has a dividend yield of 2.6%. Southcross Energy Partners, L.P. does not pay a dividend. Kinder Morgan pays out 161.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kinder Morgan has raised its dividend for 3 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and target prices for Southcross Energy Partners, L.P. and Kinder Morgan, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southcross Energy Partners, L.P. 0 0 0 0 N/A
Kinder Morgan 0 6 12 0 2.67

Kinder Morgan has a consensus target price of $23.71, suggesting a potential upside of 24.62%. Given Kinder Morgan’s higher possible upside, analysts plainly believe Kinder Morgan is more favorable than Southcross Energy Partners, L.P..

Valuation and Earnings

This table compares Southcross Energy Partners, L.P. and Kinder Morgan’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Southcross Energy Partners, L.P. $584.16 million 0.31 $58.15 million ($1.45) -1.61
Kinder Morgan $13.51 billion 3.15 $6.10 billion $0.31 61.39

Kinder Morgan has higher revenue and earnings than Southcross Energy Partners, L.P.. Southcross Energy Partners, L.P. is trading at a lower price-to-earnings ratio than Kinder Morgan, indicating that it is currently the more affordable of the two stocks.

Summary

Kinder Morgan beats Southcross Energy Partners, L.P. on 12 of the 15 factors compared between the two stocks.

Southcross Energy Partners, L.P. Company Profile

Southcross Energy Partners, L.P. provides natural gas gathering, processing, treating, compression and transportation services and natural gas liquid (NGL) fractionation and transportation services. The Company also sources, purchases, transports and sells natural gas and NGLs. Its assets are located in South Texas, Mississippi and Alabama As of December 31, 2016, its assets consisted of gathering systems, intrastate pipelines, two natural gas processing plants, one fractionation facility, 20 compressor stations and a treating system. Its gathering systems and intrastate pipelines include South Texas and Mississippi/Alabama. The assets in its South Texas region are located between Montgomery County, which is north of Houston, and Webb and Dimmit Counties near the Texas-Mexico border. The assets in its Mississippi region are located principally in the southern half of the state and consist of intrastate pipeline system in Mississippi.

Kinder Morgan Company Profile

Kinder Morgan, Inc. is an energy infrastructure company. It operates through five segments. Its Natural Gas Pipelines segment is engaged in the ownership and operation of interstate and intrastate natural gas pipeline and storage systems, and liquefied natural gas facilities, among others. Its CO2 segment is engaged in the production, transportation and marketing of carbon dioxide (CO2) to oil fields and the ownership and operation of a crude oil pipeline system, among others. Its Terminals segment is engaged in the ownership and/or operation of liquids and bulk terminal facilities located throughout the United States and portions of Canada, and Jones Act tankers. Its Products Pipelines segment is engaged in the ownership and operation of refined petroleum products, natural gas liquids and crude oil and condensate pipelines. Its Kinder Morgan Canada segment is engaged in the ownership and operation of the Trans Mountain pipeline system and Jet Fuel aviation turbine fuel pipeline.

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