Williams Companies, Inc. (The) (NYSE: WMB) and TransCanada Corporation (NYSE:TRP) are both large-cap oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, institutional ownership, valuation, dividends and profitability.

Valuation and Earnings

This table compares Williams Companies, Inc. (The) and TransCanada Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Williams Companies, Inc. (The) $8.02 billion 2.94 $3.65 billion $0.61 46.72
TransCanada Corporation $11.40 billion 3.63 $5.38 billion $0.86 55.21

TransCanada Corporation has higher revenue and earnings than Williams Companies, Inc. (The). Williams Companies, Inc. (The) is trading at a lower price-to-earnings ratio than TransCanada Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Williams Companies, Inc. (The) has a beta of 1.38, suggesting that its share price is 38% more 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.

Institutional & Insider Ownership

84.7% of Williams Companies, Inc. (The) shares are owned by institutional investors. Comparatively, 56.8% of TransCanada Corporation shares are owned by institutional investors. 0.5% of Williams Companies, Inc. (The) shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Williams Companies, Inc. (The) and TransCanada Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Williams Companies, Inc. (The) 6.24% 3.43% 1.06%
TransCanada Corporation 8.16% 12.08% 3.04%

Dividends

Williams Companies, Inc. (The) pays an annual dividend of $1.20 per share and has a dividend yield of 4.2%. TransCanada Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 4.2%. Williams Companies, Inc. (The) pays out 196.7% 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.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Williams Companies, Inc. (The) and TransCanada Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Williams Companies, Inc. (The) 0 2 10 1 2.92
TransCanada Corporation 0 1 9 0 2.90

Williams Companies, Inc. (The) presently has a consensus price target of $33.91, suggesting a potential upside of 18.98%. TransCanada Corporation has a consensus price target of $66.29, suggesting a potential upside of 39.61%. Given TransCanada Corporation’s higher probable upside, analysts plainly believe TransCanada Corporation is more favorable than Williams Companies, Inc. (The).

Summary

TransCanada Corporation beats Williams Companies, Inc. (The) on 9 of the 17 factors compared between the two stocks.

Williams Companies, Inc. (The) Company Profile

The Williams Companies, Inc. is an energy infrastructure company. The Company is focused on connecting North America’s hydrocarbon resource plays to markets for natural gas, natural gas liquids (NGL), and olefins. As of December 31, 2016, its interstate gas pipelines, midstream and olefins production interests were held through its investment in Williams Partners L.P. (WPZ). The Company’s segments include Williams Partners, Williams NGL & Petchem Services and Other. The Williams Partners segment includes its consolidated master limited partnership, WPZ. The gas pipeline business includes interstate natural gas pipelines and pipeline joint project investments. The midstream business provides natural gas gathering, treating, processing and compression services. The Williams NGL & Petchem Services segment includes its Texas Belle pipeline and certain other domestic olefins pipeline assets. Other segment includes its corporate operations and Canadian construction services company.

TransCanada Corporation Company Profile

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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