Buckeye Partners L.P. (NYSE: BPL) and Tallgrass Energy Partners, (NYSE:TEP) are both mid-cap oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.
Insider and Institutional Ownership
69.4% of Buckeye Partners L.P. shares are held by institutional investors. Comparatively, 62.1% of Tallgrass Energy Partners, shares are held by institutional investors. 0.4% of Buckeye Partners L.P. shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a summary of current ratings and target prices for Buckeye Partners L.P. and Tallgrass Energy Partners,, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Buckeye Partners L.P.||0||9||2||0||2.18|
|Tallgrass Energy Partners,||0||4||5||0||2.56|
Buckeye Partners L.P. currently has a consensus price target of $69.91, suggesting a potential upside of 33.03%. Tallgrass Energy Partners, has a consensus price target of $60.00, suggesting a potential upside of 31.84%. Given Buckeye Partners L.P.’s higher probable upside, equities analysts plainly believe Buckeye Partners L.P. is more favorable than Tallgrass Energy Partners,.
Earnings and Valuation
This table compares Buckeye Partners L.P. and Tallgrass Energy Partners,’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Buckeye Partners L.P.||$3.47 billion||2.14||$979.66 million||$3.65||14.40|
|Tallgrass Energy Partners,||$614.20 million||5.42||$351.11 million||$2.23||20.41|
Buckeye Partners L.P. has higher revenue and earnings than Tallgrass Energy Partners,. Buckeye Partners L.P. is trading at a lower price-to-earnings ratio than Tallgrass Energy Partners,, indicating that it is currently the more affordable of the two stocks.
Buckeye Partners L.P. pays an annual dividend of $5.05 per share and has a dividend yield of 9.6%. Tallgrass Energy Partners, pays an annual dividend of $3.70 per share and has a dividend yield of 8.1%. Buckeye Partners L.P. pays out 138.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy Partners, pays out 165.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Buckeye Partners L.P. has raised its dividend for 14 consecutive years and Tallgrass Energy Partners, has raised its dividend for 3 consecutive years. Buckeye Partners L.P. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Buckeye Partners L.P. has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500. Comparatively, Tallgrass Energy Partners, has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.
This table compares Buckeye Partners L.P. and Tallgrass Energy Partners,’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Buckeye Partners L.P.||14.42%||11.04%||5.29%|
|Tallgrass Energy Partners,||46.63%||20.47%||9.01%|
Buckeye Partners L.P. beats Tallgrass Energy Partners, on 10 of the 17 factors compared between the two stocks.
About Buckeye Partners L.P.
Buckeye Partners, L.P. (Buckeye) owns and operates a network of integrated assets providing midstream logistic solutions, primarily consisting of the transportation, storage, processing and marketing of liquid petroleum products. Its segments include Domestic Pipelines & Terminals, Global Marine Terminals and Merchant Services. As of December 31, 2016, the Domestic Pipelines & Terminals segment owned and operated approximately 6,000 miles of pipeline located primarily in the northeastern and upper Midwestern portions of the United States, and serviced approximately 110 delivery locations. The Global Marine Terminals segment provides marine accessible bulk storage and blending services, rail and truck rack loading/unloading, along with petroleum processing services in the East Coast and Gulf Coast regions of the United States and in the Caribbean. The Merchant Services segment is a wholesale distributor of petroleum products in the continental United States and in the Caribbean.
About Tallgrass Energy Partners,
Tallgrass Energy Partners, LP owns, operates, acquires and develops midstream energy assets in North America. The Company operates through three segments: Crude Oil Transportation & Logistics, Natural Gas Transportation & Logistics and Processing & Logistics. The Crude Oil Transportation & Logistics segment includes the ownership and operation of a Federal Energy Regulatory Commission (FERC) crude oil pipeline system, and crude oil storage and terminaling facilities. The Natural Gas Transportation & Logistics segment is engaged in the ownership and operation of FERC regulated interstate natural gas pipelines and integrated natural gas storage facilities. The Processing & Logistics segment is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities; the provision of water business services primarily to the oil and gas exploration and production industry, and the transportation of natural gas liquids (NGLs).
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