BP p.l.c. (NYSE: BP) and Midcoast Energy Partners (NYSE:MEP) are both oils/energy companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, valuation, analyst recommendations, profitability and earnings.

Insider & Institutional Ownership

10.1% of BP p.l.c. shares are owned by institutional investors. Comparatively, 64.7% of Midcoast Energy Partners shares are owned by institutional investors. 1.0% of BP p.l.c. shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares BP p.l.c. and Midcoast Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BP p.l.c. 1.74% 3.64% 1.34%
Midcoast Energy Partners -5.25% -34.51% -2.64%

Earnings & Valuation

This table compares BP p.l.c. and Midcoast Energy Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BP p.l.c. $209.85 billion 0.57 $19.97 billion $1.15 31.81
Midcoast Energy Partners N/A N/A N/A ($1.76) -4.52

BP p.l.c. has higher revenue and earnings than Midcoast Energy Partners. Midcoast Energy Partners is trading at a lower price-to-earnings ratio than BP p.l.c., indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations and price targets for BP p.l.c. and Midcoast Energy Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BP p.l.c. 3 5 12 0 2.45
Midcoast Energy Partners 0 1 0 0 2.00

BP p.l.c. currently has a consensus target price of $36.58, suggesting a potential downside of 0.01%. Midcoast Energy Partners has a consensus target price of $8.00, suggesting a potential upside of 0.63%. Given Midcoast Energy Partners’ higher possible upside, analysts plainly believe Midcoast Energy Partners is more favorable than BP p.l.c..

Dividends

BP p.l.c. pays an annual dividend of $2.38 per share and has a dividend yield of 6.5%. Midcoast Energy Partners pays an annual dividend of $1.43 per share and has a dividend yield of 18.0%. BP p.l.c. pays out 207.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Midcoast Energy Partners pays out -81.2% of its earnings in the form of a dividend. Midcoast Energy Partners has raised its dividend for 2 consecutive years. Midcoast Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

BP p.l.c. has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500. Comparatively, Midcoast Energy Partners has a beta of 2.53, suggesting that its share price is 153% more volatile than the S&P 500.

Summary

BP p.l.c. beats Midcoast Energy Partners on 8 of the 14 factors compared between the two stocks.

About BP p.l.c.

BP p.l.c. is an integrated oil and gas company. The Company owns an interest in OJSC Oil Company Rosneft (Rosneft), an oil and gas company. The Company’s segments include Upstream, Downstream, Rosneft, and Other businesses and corporate. The Upstream segment is engaged in oil and natural gas exploration, field development and production, as well as midstream transportation, storage and processing. The Downstream segment has global manufacturing and marketing operations. The Rosneft segment has a resource base of hydrocarbons onshore and offshore. The Other businesses and corporate segment comprises the biofuels and wind businesses, shipping and treasury functions, and corporate activities around the world. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging.

About Midcoast Energy Partners

Midcoast Energy Partners, L.P. (MEP) is a limited partnership company that is engaged in the natural gas and natural gas liquids (NGL) midstream business. It operates through two segments: Gathering, Processing and Transportation, and Logistics and Marketing. It also provides marketing services of natural gas and NGLs to wholesale customers. The Company’s gathering, processing and transportation business includes natural gas and NGL gathering and transportation pipeline systems, natural gas processing and treating facilities, condensate stabilizers and an NGL fractionation facility. Its logistics and marketing business provides marketing services of natural gas, NGLs and condensate received from its gathering, processing and transportation business. The Company holds interest in Midcoast Operating, L.P., a Texas limited partnership that owns a network of natural gas and NGL gathering and transportation systems, natural gas processing and treating facilities.

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