Financial Analysis: World Point Terminals (WPT) & Targa Resources (TRGP)

World Point Terminals (NYSE: WPT) and Targa Resources (NYSE:TRGP) are both energy companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Profitability

This table compares World Point Terminals and Targa Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
World Point Terminals 37.15% 19.57% 18.37%
Targa Resources -4.68% -0.52% -0.24%

Risk & Volatility

World Point Terminals has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500. Comparatively, Targa Resources has a beta of 2.22, indicating that its share price is 122% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for World Point Terminals and Targa Resources, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
World Point Terminals 0 2 0 0 2.00
Targa Resources 0 8 9 1 2.61

World Point Terminals currently has a consensus target price of $17.00, suggesting a potential downside of 1.68%. Targa Resources has a consensus target price of $54.06, suggesting a potential upside of 6.56%. Given Targa Resources’ stronger consensus rating and higher probable upside, analysts clearly believe Targa Resources is more favorable than World Point Terminals.

Institutional and Insider Ownership

13.2% of World Point Terminals shares are held by institutional investors. Comparatively, 87.4% of Targa Resources shares are held by institutional investors. 1.9% of Targa Resources shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares World Point Terminals and Targa Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
World Point Terminals N/A N/A N/A $1.04 16.63
Targa Resources $6.69 billion 1.63 -$187.30 million ($2.54) -19.97

World Point Terminals has higher earnings, but lower revenue than Targa Resources. Targa Resources is trading at a lower price-to-earnings ratio than World Point Terminals, indicating that it is currently the more affordable of the two stocks.

Dividends

World Point Terminals pays an annual dividend of $1.20 per share and has a dividend yield of 6.9%. Targa Resources pays an annual dividend of $3.64 per share and has a dividend yield of 7.2%. World Point Terminals pays out 115.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Targa Resources pays out -143.3% of its earnings in the form of a dividend. Targa Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Targa Resources beats World Point Terminals on 10 of the 15 factors compared between the two stocks.

About World Point Terminals

World Point Terminals, LP owns, operates, develops and acquires liquid bulk storage terminals and other assets relating to the storage of petroleum products, including light refined products, heavy refined products and crude oil. The Company operates fee-based facilities located along the East Coast, Gulf Coast and Midwest regions of the United States. As of December 31, 2016, through its subsidiary, Center Point Terminal Company, LLC (Center Point), the Company owned and operated 15.6 million barrels of tankage at terminals, which are located in the East Coast, Gulf Coast and Midwest regions of the United States. The Company’s terminal facilities are located on waterways, providing ship or barge access for the movement of petroleum products, and have truck racks with loading logistics. Its terminal facilities also have rail or pipeline access.

About Targa Resources

Targa Resources Corp. is a midstream energy company in North America. It provides midstream services. Its segments include Gathering and Processing, and Logistics and Marketing (Downstream Business). It is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling natural gas liquids (NGLs) and NGL products, including services to liquefied petroleum gas exporters; gathering, storing and terminalling crude oil, and storing, terminalling and selling refined petroleum products. The Gathering and Processing segment consists of gathering, compressing, dehydrating, treating, conditioning, processing, and marketing natural gas and gathering crude oil. The Logistics and Marketing segment includes all the activities necessary to convert mixed NGLs into NGL products and provides certain services, such as storing, fractionating, terminalling, transporting and marketing of NGLs and NGL products.

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