Head to Head Analysis: Western Gas Partners (WES) and BP (BP)

Western Gas Partners (NYSE: WES) and BP (NYSE:BP) are both mid-cap oils/energy companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, dividends, risk and analyst recommendations.

Institutional and Insider Ownership

61.8% of Western Gas Partners shares are held by institutional investors. Comparatively, 9.9% of BP shares are held by institutional investors. 0.0% of Western Gas Partners shares are held by insiders. Comparatively, 1.0% of BP shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Western Gas Partners and BP’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Western Gas Partners $1.80 billion 3.89 $591.33 million $1.23 37.37
BP $186.61 billion 0.71 $115.00 million $1.17 34.15

Western Gas Partners has higher earnings, but lower revenue than BP. BP is trading at a lower price-to-earnings ratio than Western Gas Partners, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Western Gas Partners and BP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Western Gas Partners 26.41% 14.68% 7.24%
BP 1.70% 4.52% 1.68%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Western Gas Partners and BP, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Gas Partners 1 3 7 0 2.55
BP 2 7 9 0 2.39

Western Gas Partners presently has a consensus price target of $60.20, suggesting a potential upside of 30.98%. BP has a consensus price target of $38.11, suggesting a potential downside of 4.59%. Given Western Gas Partners’ stronger consensus rating and higher probable upside, analysts plainly believe Western Gas Partners is more favorable than BP.

Volatility and Risk

Western Gas Partners has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500. Comparatively, BP has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500.

Dividends

Western Gas Partners pays an annual dividend of $3.62 per share and has a dividend yield of 7.9%. BP pays an annual dividend of $2.38 per share and has a dividend yield of 6.0%. Western Gas Partners pays out 294.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BP pays out 203.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Gas Partners has increased its dividend for 9 consecutive years. Western Gas Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Western Gas Partners beats BP on 13 of the 17 factors compared between the two stocks.

Western Gas Partners Company Profile

Western Gas Partners, LP is a master limited partnership (MLP) that acquires, owns, develops and operates midstream energy assets. The Company is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids (NGLs) and crude oil in the United States. The Company provides midstream services for Anadarko Petroleum Corporation (Anadarko), as well as for third-party producers and customers. The Company’s operations and activities are managed by its general partner, which is indirectly controlled by Anadarko through Western Gas Equity Partners, LP (WGP). As of December 31, 2016, its assets and investments consisted of gathering systems, treating facilities, natural gas processing plants/trains, NGL pipelines, natural gas pipelines and oil pipelines. These assets and investments are located in the Rocky Mountains (Colorado, Utah and Wyoming), North-central Pennsylvania and Texas.

BP Company Profile

BP p.l.c. is an integrated oil and gas company. The Company owns an interest in OJSC Oil Company Rosneft (Rosneft), an oil and gas company. The Company’s segments include Upstream, Downstream, Rosneft, and Other businesses and corporate. The Upstream segment is engaged in oil and natural gas exploration, field development and production, as well as midstream transportation, storage and processing. The Downstream segment has global manufacturing and marketing operations. The Rosneft segment has a resource base of hydrocarbons onshore and offshore. The Other businesses and corporate segment comprises the biofuels and wind businesses, shipping and treasury functions, and corporate activities around the world. The Company provides its customers with fuel for transportation, energy for heat and light, lubricants to keep engines moving and the petrochemicals products used to make everyday items as diverse as paints, clothes and packaging.

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