Targa Pipeline Partners (NYSE: APL) and Archrock (NYSE:AROC) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Institutional & Insider Ownership

92.4% of Archrock shares are held by institutional investors. 2.5% of Archrock shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Archrock pays an annual dividend of $0.48 per share and has a dividend yield of 4.1%. Targa Pipeline Partners does not pay a dividend. Archrock has increased its dividend for 7 consecutive years.

Profitability

This table compares Targa Pipeline Partners and Archrock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Targa Pipeline Partners 14.09% 17.87% 9.56%
Archrock -8.57% -3.44% -0.98%

Analyst Ratings

This is a summary of recent ratings and price targets for Targa Pipeline Partners and Archrock, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Targa Pipeline Partners 0 0 0 0 N/A
Archrock 0 5 1 0 2.17

Archrock has a consensus target price of $13.35, suggesting a potential upside of 14.10%. Given Archrock’s higher possible upside, analysts plainly believe Archrock is more favorable than Targa Pipeline Partners.

Earnings & Valuation

This table compares Targa Pipeline Partners and Archrock’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Targa Pipeline Partners N/A N/A N/A N/A N/A
Archrock $777.50 million 1.07 $284.77 million N/A N/A

Archrock has higher revenue and earnings than Targa Pipeline Partners.

Summary

Archrock beats Targa Pipeline Partners on 7 of the 10 factors compared between the two stocks.

About Targa Pipeline Partners

Targa Pipeline Partners, L.P. (the Partnership), formerly Atlas Pipeline Partners, L.P., was formed by its parent, Targa Resources Corp., to own, operate, acquire and develop a diversified portfolio of complementary midstream energy assets. The Partnership is a provider of midstream natural gas, natural gas liquids (NGL), terminaling and crude oil gathering services in the United States. The Partnership is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling NGLs and NGL products; gathering, storing and terminaling crude oil; and storing, terminaling and selling refined petroleum products.

About Archrock

Archrock, Inc. is a natural gas contract operations services company. The Company also provides natural gas compression services to customers in the oil and natural gas industry throughout the United States and supplies aftermarket services to customers that own compression equipment in the United States. The Company operates through two segments: contract operations and aftermarket services. The contract operations segment primarily provides natural gas compression services to meet specific customer requirements. The Company provides contract operations services, including the personnel, equipment, tools, materials and supplies to meet its customers’ natural gas compression needs. The aftermarket services segment provides a range of services to support the compression needs of customers, from parts sales and normal maintenance services to full operation of a customer’s owned assets.

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