Head-To-Head Review: Pembina Pipeline (PBA) & Delek Logistics Partners (DKL)

Delek Logistics Partners (NYSE: DKL) and Pembina Pipeline (NYSE:PBA) are both energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, profitability, risk, dividends, earnings and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and price targets for Delek Logistics Partners and Pembina Pipeline, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Delek Logistics Partners 0 2 0 0 2.00
Pembina Pipeline 0 0 4 0 3.00

Delek Logistics Partners presently has a consensus target price of $32.50, suggesting a potential upside of 11.88%. Pembina Pipeline has a consensus target price of $44.00, suggesting a potential upside of 27.09%. Given Pembina Pipeline’s stronger consensus rating and higher possible upside, analysts plainly believe Pembina Pipeline is more favorable than Delek Logistics Partners.

Dividends

Delek Logistics Partners pays an annual dividend of $2.86 per share and has a dividend yield of 9.8%. Pembina Pipeline pays an annual dividend of $1.70 per share and has a dividend yield of 4.9%. Delek Logistics Partners pays out 143.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pembina Pipeline pays out 171.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Delek Logistics Partners has increased its dividend for 3 consecutive years. Delek Logistics Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

28.8% of Delek Logistics Partners shares are owned by institutional investors. Comparatively, 39.4% of Pembina Pipeline shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Delek Logistics Partners and Pembina Pipeline’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Delek Logistics Partners 12.86% -332.86% 15.79%
Pembina Pipeline 11.66% 8.36% 3.65%

Earnings and Valuation

This table compares Delek Logistics Partners and Pembina Pipeline’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Delek Logistics Partners $448.06 million 1.61 $62.80 million $1.99 14.60
Pembina Pipeline $3.22 billion 5.40 $351.92 million $0.99 34.97

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

Volatility and Risk

Delek Logistics Partners has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500. Comparatively, Pembina Pipeline has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500.

Summary

Pembina Pipeline beats Delek Logistics Partners on 9 of the 16 factors compared between the two stocks.

About Delek Logistics Partners

Delek Logistics Partners, LP owns and operates logistics and marketing assets for crude oil, and intermediate and refined products. The Company’s business primarily consists of certain crude oil, intermediate and refined products pipelines and transportation, storage, wholesale marketing, terminaling and offloading assets, which were previously owned, operated or held by Delek US Holdings, Inc. (Delek), and assets acquired from unrelated third parties. The Company operates through two segments: Pipelines and Transportation segment, and Wholesale Marketing and Terminalling segment. The Company engaged in the gathering, transporting and storing crude oil; storing intermediate products and feed stocks, and marketing, distributing, transporting, offloading and storing refined products. The Company also provides crude oil, intermediate and refined products transportation services for terminaling, and marketing services to third parties primarily in Texas, Tennessee and Arkansas.

About Pembina Pipeline

Pembina Pipeline Corporation is an energy transportation and service provider. The Company operates through four segments. The Conventional Pipelines segment consists of the tariff-based operations of pipelines and related facilities to deliver crude oil, condensate and natural gas liquids (NGL) in Alberta, British Columbia, Saskatchewan, and North Dakota, United States. The Oil Sands & Heavy Oil segment consists of the Syncrude, Horizon, Nipisi and Mitsue Pipelines, and the Cheecham Lateral. These pipelines and related facilities deliver synthetic crude oil produced from oil sands under long-term cost-of-service arrangements. The Gas Services segment consists of natural gas gathering and processing facilities. The Midstream segment consists of the Company’s interests in extraction and fractionation facilities, terminalling and storage hub services under a mixture of short, medium and long-term contractual arrangements.

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