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

Insider and Institutional Ownership

64.7% of Midcoast Energy Partners shares are held by institutional investors. 2.6% of PBF Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares PBF Energy and Midcoast Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PBF Energy -0.23% -4.98% -1.61%
Midcoast Energy Partners -5.25% -34.51% -2.64%

Analyst Recommendations

This is a breakdown of recent recommendations for PBF Energy and Midcoast Energy Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PBF Energy 1 7 5 0 2.31
Midcoast Energy Partners 0 1 0 0 2.00

PBF Energy presently has a consensus target price of $23.67, suggesting a potential downside of 11.79%. 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 PBF Energy.

Risk & Volatility

PBF Energy has a beta of 1.41, suggesting that its stock price is 41% more volatile than the S&P 500. Comparatively, Midcoast Energy Partners has a beta of 2.53, suggesting that its stock price is 153% more volatile than the S&P 500.

Valuation and Earnings

This table compares PBF Energy and Midcoast Energy Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PBF Energy $19.03 billion 0.15 $189.02 million ($0.33) -81.30
Midcoast Energy Partners N/A N/A N/A ($1.76) -4.52

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

Dividends

PBF Energy pays an annual dividend of $1.20 per share and has a dividend yield of 4.5%. Midcoast Energy Partners pays an annual dividend of $1.43 per share and has a dividend yield of 18.0%. PBF Energy pays out -363.6% of its earnings in the form of a dividend. Midcoast Energy Partners pays out -81.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Midcoast Energy Partners has increased 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.

Summary

PBF Energy beats Midcoast Energy Partners on 9 of the 14 factors compared between the two stocks.

PBF Energy Company Profile

PBF Energy Inc. (PBF Energy) is a holding company. The Company is an independent petroleum refiner and supplier of unbranded transportation fuels, heating oil, petrochemical feedstocks, lubricants and other petroleum products in the United States. The Company operates through two segments: Refining and Logistics. It sells its products throughout the Northeast, Midwest, Gulf Coast and West Coast of the United States, as well as in other regions of the United States and Canada, and ships products to other international destinations. As of December 31, 2016, it owned and operated five domestic oil refineries and related assets. As of December 31, 2016, its refineries had a combined processing capacity, known as throughput, of approximately 900,000 barrels per day (bpd) and a weighted-average Nelson Complexity Index of approximately 12.2. As of December 31, 2016, the Company owned and operated five refineries providing geographic and market diversity.

Midcoast Energy Partners Company Profile

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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