Sunoco Logistics Partners (NYSE: ETP) and TransCanada Corporation (NYSE:TRP) are both large-cap oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Volatility and Risk

Sunoco Logistics Partners has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500. Comparatively, TransCanada Corporation has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Sunoco Logistics Partners 3.57% 4.67% 2.04%
TransCanada Corporation 8.16% 12.08% 3.04%

Dividends

Sunoco Logistics Partners pays an annual dividend of $2.20 per share and has a dividend yield of 12.1%. TransCanada Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 4.1%. Sunoco Logistics Partners pays out 440.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TransCanada Corporation pays out 232.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sunoco Logistics Partners has increased its dividend for 4 consecutive years. Sunoco Logistics Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Sunoco Logistics Partners and TransCanada Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sunoco Logistics Partners 0 2 12 0 2.86
TransCanada Corporation 0 1 8 0 2.89

Sunoco Logistics Partners currently has a consensus price target of $28.46, indicating a potential upside of 56.04%. TransCanada Corporation has a consensus price target of $66.29, indicating a potential upside of 35.14%. Given Sunoco Logistics Partners’ higher probable upside, equities analysts plainly believe Sunoco Logistics Partners is more favorable than TransCanada Corporation.

Insider & Institutional Ownership

58.5% of Sunoco Logistics Partners shares are owned by institutional investors. Comparatively, 56.8% of TransCanada Corporation shares are owned by institutional investors. 3.7% of Sunoco Logistics Partners shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Sunoco Logistics 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
Sunoco Logistics Partners $25.53 billion 0.79 $4.81 billion $0.50 36.48
TransCanada Corporation $11.40 billion 3.75 $5.38 billion $0.86 57.04

TransCanada Corporation has higher revenue, but lower earnings than Sunoco Logistics Partners. Sunoco Logistics 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.

About Sunoco Logistics Partners

Energy Transfer Partners, L.P., formerly Sunoco Logistics Partners L.P., owns and operates a logistics business. The Company is engaged in the transport, terminaling and storage of crude oil, refined products and natural gas liquids (NGLs). The Company’s segments include Crude Oil, Natural Gas Liquids and Refined Products. In addition to logistics services, it also owns acquisition and marketing assets. The Crude Oil segment provides transportation, terminaling and acquisition and marketing services to crude oil markets throughout the southwest, midwest and northeastern United States. The Natural Gas Liquids segment transports, stores, and executes acquisition and marketing activities utilizing a network of pipelines, storage and blending facilities, and strategic off-take locations that provide access to multiple NGL markets. The Refined Products segment provides transportation and terminaling services, using refined products pipelines and refined products marketing terminals.

About TransCanada Corporation

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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