Financial Review: Plains GP (PAGP) versus Southcross Energy Partners (SXE)

Plains GP (NYSE: PAGP) and Southcross Energy Partners (NYSE:SXE) are both oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, dividends, risk, profitability and earnings.

Insider and Institutional Ownership

83.1% of Plains GP shares are owned by institutional investors. Comparatively, 3.0% of Southcross Energy Partners shares are owned by institutional investors. 39.9% of Plains GP shares are owned by insiders. Comparatively, 23.8% of Southcross Energy Partners shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Plains GP and Southcross Energy Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Plains GP $20.18 billion 0.17 $94.00 million $0.45 48.78
Southcross Energy Partners $548.72 million 0.24 -$94.94 million ($1.21) -1.40

Plains GP has higher revenue and earnings than Southcross Energy Partners. Southcross Energy Partners is trading at a lower price-to-earnings ratio than Plains GP, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Plains GP has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500. Comparatively, Southcross Energy Partners has a beta of 4.01, suggesting that its stock price is 301% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Plains GP and Southcross Energy Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Plains GP 0 9 7 0 2.44
Southcross Energy Partners 0 1 0 0 2.00

Plains GP presently has a consensus price target of $25.93, indicating a potential upside of 18.15%. Given Plains GP’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Plains GP is more favorable than Southcross Energy Partners.

Dividends

Plains GP pays an annual dividend of $1.20 per share and has a dividend yield of 5.5%. Southcross Energy Partners does not pay a dividend. Plains GP pays out 266.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Plains GP has raised its dividend for 3 consecutive years and Southcross Energy Partners has raised its dividend for 2 consecutive years.

Profitability

This table compares Plains GP and Southcross Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Plains GP 0.25% 0.50% 0.22%
Southcross Energy Partners -13.74% -16.59% -7.83%

Summary

Plains GP beats Southcross Energy Partners on 14 of the 17 factors compared between the two stocks.

About Plains GP

Plains GP Holdings, L.P. owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (NGL), natural gas and refined products. The Company operates through three segments: Transportation, Facilities, and Supply and Logistics. Through its three business segments, the Company is engaged in the transportation, storage, terminaling and marketing of crude oil, NGL and natural gas. The Transportation segment operations consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. The Facilities segment operations consist of fee-based activities associated with providing storage, terminaling and throughput services for crude oil, refined products, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. The Supply and Logistics segment operations consist of the merchant-related activities.

About Southcross Energy Partners

Southcross Energy Partners, L.P. provides natural gas gathering, processing, treating, compression and transportation services and natural gas liquid (NGL) fractionation and transportation services. The Company also sources, purchases, transports and sells natural gas and NGLs. Its assets are located in South Texas, Mississippi and Alabama As of December 31, 2016, its assets consisted of gathering systems, intrastate pipelines, two natural gas processing plants, one fractionation facility, 20 compressor stations and a treating system. Its gathering systems and intrastate pipelines include South Texas and Mississippi/Alabama. The assets in its South Texas region are located between Montgomery County, which is north of Houston, and Webb and Dimmit Counties near the Texas-Mexico border. The assets in its Mississippi region are located principally in the southern half of the state and consist of intrastate pipeline system in Mississippi.

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