Critical Contrast: Summit Midstream Partners (SMLP) vs. Penntex Midstream Partners (PTXP)
Summit Midstream Partners (NYSE: SMLP) and Penntex Midstream Partners (NASDAQ:PTXP) are both small-cap oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.
Insider and Institutional Ownership
48.8% of Summit Midstream Partners shares are owned by institutional investors. Comparatively, 55.0% of Penntex Midstream Partners shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a breakdown of recent recommendations and price targets for Summit Midstream Partners and Penntex Midstream Partners, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Summit Midstream Partners||1||1||3||0||2.40|
|Penntex Midstream Partners||0||4||0||0||2.00|
Summit Midstream Partners presently has a consensus target price of $25.00, suggesting a potential upside of 11.11%. Penntex Midstream Partners has a consensus target price of $20.00, suggesting a potential upside of 0.00%. Given Summit Midstream Partners’ stronger consensus rating and higher probable upside, equities analysts clearly believe Summit Midstream Partners is more favorable than Penntex Midstream Partners.
Summit Midstream Partners pays an annual dividend of $2.30 per share and has a dividend yield of 10.2%. Penntex Midstream Partners pays an annual dividend of $1.18 per share and has a dividend yield of 5.9%. Summit Midstream Partners pays out 157.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Penntex Midstream Partners pays out 453.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Summit Midstream Partners has raised its dividend for 4 consecutive years. Summit Midstream Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares Summit Midstream Partners and Penntex Midstream Partners’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Summit Midstream Partners||$402.36 million||4.17||-$40.91 million||$1.46||15.41|
|Penntex Midstream Partners||N/A||N/A||N/A||$0.26||76.92|
Penntex Midstream Partners has lower revenue, but higher earnings than Summit Midstream Partners. Summit Midstream Partners is trading at a lower price-to-earnings ratio than Penntex Midstream Partners, indicating that it is currently the more affordable of the two stocks.
This table compares Summit Midstream Partners and Penntex Midstream Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Summit Midstream Partners||24.14%||11.61%||4.31%|
|Penntex Midstream Partners||34.54%||11.00%||5.81%|
Summit Midstream Partners beats Penntex Midstream Partners on 9 of the 13 factors compared between the two stocks.
About Summit Midstream Partners
Summit Midstream Partners, LP focuses on developing, owning and operating midstream energy infrastructure assets. The Company’s segments include the Utica Shale, which includes its ownership interest in Ohio Gathering, as well as Summit Utica; the Williston Basin, which includes Bison Midstream, Polar and Divide and Tioga Midstream; the Marcellus Shale, which includes Mountaineer Midstream; the Barnett Shale, which includes DFW Midstream Services LLC (DFW Midstream), and the Piceance Basin /DJ Basins, which includes Grand River and Niobrara G&P. The Company’s assets are located in the producing areas of unconventional resource basins, primarily shale formations, in the continental United States. It provides natural gas gathering, treating and processing services, as well as crude oil and produced water gathering services pursuant to long-term and fee-based agreements with its customers.
About Penntex Midstream Partners
PennTex Midstream Partners, LP, focuses on owning, operating, acquiring and developing midstream energy infrastructure assets in North America. The Company owns and operates midstream gathering, processing and transportation assets in northern Louisiana. The Company provides natural gas gathering and processing and residue gas and natural gas liquid (NGL) transportation services to producers focused on the Cotton Valley formation in northern Louisiana. The Company’s assets primarily consisted of natural gas gathering pipeline, two 200 million cubic feet per day (MMcf/d) design-capacity cryogenic natural gas processing plants, and residue gas and NGL transportation pipelines, as of December 31, 2016. In addition to providing midstream services to its primary customer with its existing assets, the Company pursues other opportunities for organic development and growth as producers in its region continue to develop their acreage.
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