Critical Comparison: Southcross Energy Partners (SXE) & Noble Midstream Partners (NBLX)

Southcross Energy Partners (NYSE: SXE) and Noble Midstream Partners (NYSE:NBLX) are both small-cap oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, profitability, risk, analyst recommendations and dividends.

Insider & Institutional Ownership

2.8% of Southcross Energy Partners shares are held by institutional investors. Comparatively, 75.7% of Noble Midstream Partners shares are held by institutional investors. 23.8% of Southcross Energy Partners shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Southcross Energy Partners -13.74% -16.59% -7.83%
Noble Midstream Partners 55.83% 36.74% 24.51%

Dividends

Noble Midstream Partners pays an annual dividend of $1.87 per share and has a dividend yield of 3.3%. Southcross Energy Partners does not pay a dividend. Noble Midstream Partners pays out 50.5% of its earnings in the form of a dividend. Noble Midstream Partners has raised its dividend for 4 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations for Southcross Energy Partners and Noble Midstream Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southcross Energy Partners 0 1 0 0 2.00
Noble Midstream Partners 0 2 7 0 2.78

Noble Midstream Partners has a consensus price target of $53.63, indicating a potential downside of 4.56%. Given Noble Midstream Partners’ stronger consensus rating and higher possible upside, analysts clearly believe Noble Midstream Partners is more favorable than Southcross Energy Partners.

Valuation and Earnings

This table compares Southcross Energy Partners and Noble Midstream Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southcross Energy Partners $548.72 million 0.30 -$94.94 million ($1.21) -1.74
Noble Midstream Partners $160.72 million 8.12 $74.44 million $3.70 15.19

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

Volatility and Risk

Southcross Energy Partners has a beta of 4.01, suggesting that its share price is 301% more volatile than the S&P 500. Comparatively, Noble Midstream Partners has a beta of 0.44, suggesting that its share price is 56% less volatile than the S&P 500.

Summary

Noble Midstream Partners beats Southcross Energy Partners on 12 of the 16 factors compared between the two stocks.

Southcross Energy Partners Company Profile

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.

Noble Midstream Partners Company Profile

Noble Midstream Partners LP is engaged in owning, operating, developing and acquiring a range of domestic midstream infrastructure assets. The Company’s areas of focus are in the area of Denver-Julesburg (DJ) Basin in Colorado and the Southern Delaware Basin position of the Permian Basin in Texas (Delaware Basin). Its segments include Gathering Systems, Fresh Water Delivery, and Investments in White Cliffs and Other. The Gathering Systems segment includes crude oil, natural gas and produced water gathering, as well as crude oil treating. It holds interest in White Cliffs Pipeline L.L.C. (the White Cliffs Interest). The Investments in White Cliffs and Other segment includes activity associated with the White Cliffs Interest. As of December 31, 2016, the White Cliffs Pipeline system consisted of two 527-mile crude oil pipelines that extended from the DJ Basin to the Cushing, Oklahoma. It provides crude oil, natural gas, and water-related midstream services for Noble Energy, Inc.

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