Shell Midstream Partners, L.P. (NYSE: SHLX) and Semgroup Corporation (NYSE:SEMG) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Volatility & Risk

Shell Midstream Partners, L.P. has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500. Comparatively, Semgroup Corporation has a beta of 2.03, meaning that its share price is 103% more volatile than the S&P 500.

Dividends

Shell Midstream Partners, L.P. pays an annual dividend of $1.22 per share and has a dividend yield of 4.7%. Semgroup Corporation pays an annual dividend of $1.80 per share and has a dividend yield of 7.6%. Shell Midstream Partners, L.P. pays out 98.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Semgroup Corporation pays out 6,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners, L.P. has increased its dividend for 3 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Shell Midstream Partners, L.P. and Semgroup Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shell Midstream Partners, L.P. 0 1 4 0 2.80
Semgroup Corporation 0 4 2 0 2.33

Shell Midstream Partners, L.P. currently has a consensus price target of $36.00, indicating a potential upside of 38.46%. Semgroup Corporation has a consensus price target of $34.00, indicating a potential upside of 44.07%. Given Semgroup Corporation’s higher probable upside, analysts plainly believe Semgroup Corporation is more favorable than Shell Midstream Partners, L.P..

Valuation and Earnings

This table compares Shell Midstream Partners, L.P. and Semgroup Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Shell Midstream Partners, L.P. $283.50 million 16.27 $160.60 million $1.24 20.97
Semgroup Corporation $1.66 billion 1.12 $147.28 million $0.03 786.67

Shell Midstream Partners, L.P. has higher revenue, but lower earnings than Semgroup Corporation. Shell Midstream Partners, L.P. is trading at a lower price-to-earnings ratio than Semgroup Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Shell Midstream Partners, L.P. and Semgroup Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shell Midstream Partners, L.P. 87.22% 258.67% 28.64%
Semgroup Corporation 0.24% 3.46% 1.60%

Institutional and Insider Ownership

45.9% of Shell Midstream Partners, L.P. shares are owned by institutional investors. Comparatively, 84.8% of Semgroup Corporation shares are owned by institutional investors. 0.8% of Semgroup Corporation shares are owned 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.

Summary

Shell Midstream Partners, L.P. beats Semgroup Corporation on 10 of the 17 factors compared between the two stocks.

Shell Midstream Partners, L.P. Company Profile

Shell Midstream Partners, L.P. is a master limited partnership company, which owns, operates, develops and acquires pipelines and other midstream assets. The Company conducts its operations through its subsidiary, Shell Midstream Operating, LLC. Its assets consist of interests in entities that own crude oil and refined products pipelines serving as key infrastructure to transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and to deliver refined products from those markets to demand centers. As of December 31, 2016, it owned interests in seven crude oil pipeline systems, three refined products systems, one natural gas gathering pipeline system and a crude tank storage and terminal system. Its pipeline and terminal systems include Zydeco crude oil system, Auger crude oil system, Mars crude oil system, Bengal product system, Poseidon crude oil system, Odyssey crude oil system, Proteus crude oil system and Endymion crude oil system.

Semgroup Corporation Company Profile

SemGroup Corporation is a provider of gathering, transportation, storage, distribution, marketing and other midstream services to producers, refiners of petroleum products and other market participants located in the Midwest and Rocky Mountain regions of the United States and Canada. The Company’s segments include Crude Transportation, which operates crude oil pipelines and truck transportation businesses in the United States; Crude Facilities, which operates crude oil storage and terminal businesses in the United States; Crude Supply and Logistics, which operates a crude oil marketing business; SemGas, which provides natural gas gathering and processing services; SemCAMS, which operates natural gas processing and gathering facilities in Alberta, Canada; SemLogistics, which owns petroleum products storage facility in the United Kingdom, and SemMexico, which provides liquid asphalt cement products and product application services to the Mexican market, and Corporate and Other.

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