Arc Logistics Partners (NYSE: ARCX) and Western Gas Equity Partners (NYSE:WGP) are both energy companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for Arc Logistics Partners and Western Gas Equity Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arc Logistics Partners 0 3 0 0 2.00
Western Gas Equity Partners 0 2 6 0 2.75

Arc Logistics Partners presently has a consensus target price of $16.50, suggesting a potential upside of 0.49%. Western Gas Equity Partners has a consensus target price of $50.50, suggesting a potential upside of 38.81%. Given Western Gas Equity Partners’ stronger consensus rating and higher possible upside, analysts clearly believe Western Gas Equity Partners is more favorable than Arc Logistics Partners.

Earnings & Valuation

This table compares Arc Logistics Partners and Western Gas Equity Partners’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arc Logistics Partners $105.38 million 3.05 $15.04 million $0.41 40.05
Western Gas Equity Partners $1.80 billion 4.41 $345.77 million $1.65 22.05

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

Dividends

Arc Logistics Partners pays an annual dividend of $1.76 per share and has a dividend yield of 10.7%. Western Gas Equity Partners pays an annual dividend of $2.15 per share and has a dividend yield of 5.9%. Arc Logistics Partners pays out 429.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Gas Equity Partners pays out 130.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Arc Logistics Partners has increased its dividend for 3 consecutive years and Western Gas Equity Partners has increased its dividend for 2 consecutive years. Arc Logistics Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Arc Logistics Partners has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500. Comparatively, Western Gas Equity Partners has a beta of 1.5, indicating that its stock price is 50% more volatile than the S&P 500.

Profitability

This table compares Arc Logistics Partners and Western Gas Equity Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arc Logistics Partners 9.14% 3.38% 1.88%
Western Gas Equity Partners 16.96% 8.99% 4.69%

Insider & Institutional Ownership

44.4% of Arc Logistics Partners shares are owned by institutional investors. Comparatively, 18.4% of Western Gas Equity Partners shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Western Gas Equity Partners beats Arc Logistics Partners on 12 of the 16 factors compared between the two stocks.

About Arc Logistics Partners

Arc Logistics Partners LP owns, operates, develops and acquires a portfolio of energy logistics assets. The Company is engaged in the terminaling, storage, throughput and transloading of crude oil and petroleum products. The Company is focused on growing its business through the optimization, organic development and acquisition of terminaling, storage, rail, pipeline and other energy logistics assets. As of March 6, 2017, the Company’s energy logistics assets were located in the East Coast, Gulf Coast, Midwest, Rocky Mountains and West Coast regions of the United States and supplied a group of third-party customers, including oil companies, independent refiners, crude oil and petroleum product marketers, distributors and various industrial manufacturers. As of December 31, 2016, its assets consisted of 21 terminals in 12 states; four rail transloading facilities, and the liquefied natural gas (LNG) Interest in connection with the LNG Facility.

About Western Gas Equity Partners

Western Gas Equity Partners, LP is a limited partnership. The Company is formed to own approximately three types of partnership interests in Western Gas Partners, LP (WES). WES is an master limited partnership (MLP) engaged in the business of gathering, compressing, treating, processing and transporting natural gas, and gathering, stabilizing and transporting condensate, natural gas liquids (NGLs) and crude oil. WES provides these midstream services for Anadarko Petroleum Corporation (Anadarko), as well as for third-party producers and customers. Its assets and investments are located in the Rocky Mountains (Colorado, Utah and Wyoming), North-central Pennsylvania and Texas. The Bison treating facility treats and compresses gas from coal-bed methane wells in the Powder River Basin of Wyoming. MIGC, LLC receives gas from various coal-bed methane gathering systems in the Powder River Basin and the Hilight system, as well as from WBI Energy Transmission, Inc.

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