Targa Resources Partners (NGLS) and Suburban Propane Partners (SPH) Financial Analysis

Targa Resources Partners (NYSE: NGLS) and Suburban Propane Partners (NYSE:SPH) are both energy companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Dividends

Targa Resources Partners pays an annual dividend of $3.30 per share and has a dividend yield of 31.0%. Suburban Propane Partners pays an annual dividend of $2.40 per share and has a dividend yield of 9.5%. Targa Resources Partners pays out 423.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Suburban Propane Partners pays out 363.6% 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 Partners has increased its dividend for 8 consecutive years. Targa Resources Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Targa Resources Partners and Suburban Propane Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Targa Resources Partners 3.27% 0.29% 1.61%
Suburban Propane Partners 9.96% 26.88% 6.76%

Insider and Institutional Ownership

25.4% of Suburban Propane Partners shares are held by institutional investors. 0.6% of Suburban Propane Partners shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Targa Resources Partners and Suburban Propane Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Targa Resources Partners 0 0 0 0 N/A
Suburban Propane Partners 0 1 2 0 2.67

Suburban Propane Partners has a consensus price target of $26.67, indicating a potential upside of 5.49%. Given Suburban Propane Partners’ higher probable upside, analysts plainly believe Suburban Propane Partners is more favorable than Targa Resources Partners.

Valuation and Earnings

This table compares Targa Resources Partners and Suburban Propane Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Targa Resources Partners N/A N/A N/A $0.78 13.64
Suburban Propane Partners $1.19 billion 1.31 $37.99 million $0.66 38.30

Suburban Propane Partners has higher revenue and earnings than Targa Resources Partners. Targa Resources Partners is trading at a lower price-to-earnings ratio than Suburban Propane Partners, indicating that it is currently the more affordable of the two stocks.

Summary

Suburban Propane Partners beats Targa Resources Partners on 10 of the 13 factors compared between the two stocks.

Targa Resources Partners Company Profile

Targa Resources Partners LP is a provider of midstream natural gas and natural gas liquid (NGL) services in the United States with a presence in crude oil gathering and petroleum terminaling. The Company is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling NGLs and NGL products, including services to liquefied petroleum gas (LPG) exporters; gathering, storing and terminaling crude oil, and storing, terminaling and selling refined petroleum products. The Company operates in two divisions: Gathering and Processing, and Logistics and Marketing. The Gathering and Processing division consists of two segments: Field Gathering and Processing, and Coastal Gathering and Processing. The Logistics and Marketing division consists of two segments: Logistics Assets and Marketing and Distribution.

Suburban Propane Partners Company Profile

Suburban Propane Partners, L.P. is a marketer and distributor of a range of products. The Company specializes in the distribution of propane, fuel oil and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. The Company’s segments include Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, and All Other. In support of its marketing and distribution operations, the Company installs and services a range of home comfort equipment, particularly in the areas of heating and ventilation. The Company conducts its business through Suburban Propane, L.P., which operates its propane business and assets (the Operating Partnership), and its direct and indirect subsidiaries. As of September 24, 2016, it had sold approximately 414.8 million gallons of propane and 30.9 million gallons of fuel oil and refined fuels to retail customers. The Company owns and operates a propane storage facility in Elk Grove, California.

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