Summit Midstream (NYSE:SMC) versus Western Midstream Partners (NYSE:WES) Critical Review

Western Midstream Partners (NYSE:WES) and Summit Midstream (NYSE:SMC) are both energy companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, risk, profitability, earnings and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations for Western Midstream Partners and Summit Midstream, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Midstream Partners	2	4	1	0	1.86
Summit Midstream	0	0	0	0	0.00

Western Midstream Partners presently has a consensus target price of $38.43, indicating a potential upside of 2.34%. Given Western Midstream Partners’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Western Midstream Partners is more favorable than Summit Midstream.

Earnings & Valuation

This table compares Western Midstream Partners and Summit Midstream”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Midstream Partners	$3.61 billion	3.97	$1.02 billion	$4.03	9.32
Summit Midstream	$429.62 million	1.20	-$38.95 million	($13.09)	-2.12

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

Risk and Volatility

Western Midstream Partners has a beta of 2.4, indicating that its share price is 140% more volatile than the S&P 500. Comparatively, Summit Midstream has a beta of 1.92, indicating that its share price is 92% more volatile than the S&P 500.

Institutional & Insider Ownership

84.8% of Western Midstream Partners shares are held by institutional investors. Comparatively, 43.0% of Summit Midstream shares are held by institutional investors. 0.0% of Western Midstream Partners shares are held by insiders. Comparatively, 5.3% of Summit Midstream shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Western Midstream Partners and Summit Midstream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Midstream Partners	42.99%	46.02%	12.18%
Summit Midstream	-23.01%	0.71%	0.22%

Summary

Western Midstream Partners beats Summit Midstream on 13 of the 14 factors compared between the two stocks.

About Western Midstream Partners

Western Midstream Partners, LP, together with its subsidiaries, operates as a midstream energy company primarily in the United States. It is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing produced water. The company also buys and sells natural gas, NGLs, and condensate. It operates assets located in Texas, New Mexico, the Rocky Mountains, and North-central Pennsylvania. Western Midstream Holdings, LLC operates as the general partner of the company. The company was formerly known as Western Gas Equity Partners, LP and changed its name to Western Midstream Partners, LP in February 2019. Western Midstream Partners, LP was incorporated in 2007 and is based in The Woodlands, Texas.

About Summit Midstream

Summit Midstream Corporation focuses on owning, developing, and operating midstream energy infrastructure assets primarily shale formations in the continental United States. It operates natural gas, crude oil, and produced water gathering systems in four unconventional resource basins, including the Williston Basin in North Dakota, which includes the Bakken and Three Forks shale formations; the Denver-Julesburg Basin that consists of the Niobrara and Codell shale formations in Colorado and Wyoming; the Fort Worth Basin in Texas, which comprises the Barnett Shale formation; and the Piceance Basin in Colorado, which includes the Mesaverde formation, as well as the emerging Mancos and Niobrara Shale formations. It serves natural gas and crude oil producers. Summit Midstream Corporation was founded in 2012 and is based in Houston, Texas.