Kinder Morgan (NYSE: KMI) and Pembina Pipeline (NYSE:PBA) are both large-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, profitability, institutional ownership, dividends, valuation and risk.

Risk & Volatility

Kinder Morgan has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Pembina Pipeline has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500.

Institutional & Insider Ownership

60.9% of Kinder Morgan shares are held by institutional investors. Comparatively, 42.5% of Pembina Pipeline shares are held by institutional investors. 14.0% of Kinder Morgan shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Kinder Morgan and Pembina Pipeline’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kinder Morgan $13.06 billion 3.04 $708.00 million $0.56 31.70
Pembina Pipeline $3.22 billion 5.47 $351.92 million $0.99 35.39

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

Analyst Ratings

This is a breakdown of recent ratings for Kinder Morgan and Pembina Pipeline, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kinder Morgan 0 8 9 0 2.53
Pembina Pipeline 0 1 3 0 2.75

Kinder Morgan presently has a consensus price target of $23.00, suggesting a potential upside of 29.58%. Given Kinder Morgan’s higher possible upside, research analysts plainly believe Kinder Morgan is more favorable than Pembina Pipeline.

Profitability

This table compares Kinder Morgan and Pembina Pipeline’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kinder Morgan 10.39% 4.33% 1.93%
Pembina Pipeline 11.66% 8.36% 3.65%

Dividends

Kinder Morgan pays an annual dividend of $0.50 per share and has a dividend yield of 2.8%. Pembina Pipeline pays an annual dividend of $1.70 per share and has a dividend yield of 4.9%. Kinder Morgan pays out 89.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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.

Summary

Pembina Pipeline beats Kinder Morgan on 9 of the 16 factors compared between the two stocks.

About Kinder Morgan

Kinder Morgan, Inc. is an energy infrastructure company. It operates through five segments. Its Natural Gas Pipelines segment is engaged in the ownership and operation of interstate and intrastate natural gas pipeline and storage systems, and liquefied natural gas facilities, among others. Its CO2 segment is engaged in the production, transportation and marketing of carbon dioxide (CO2) to oil fields and the ownership and operation of a crude oil pipeline system, among others. Its Terminals segment is engaged in the ownership and/or operation of liquids and bulk terminal facilities located throughout the United States and portions of Canada, and Jones Act tankers. Its Products Pipelines segment is engaged in the ownership and operation of refined petroleum products, natural gas liquids and crude oil and condensate pipelines. Its Kinder Morgan Canada segment is engaged in the ownership and operation of the Trans Mountain pipeline system and Jet Fuel aviation turbine fuel pipeline.

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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