Analyzing Hess (HES) and Suburban Propane Partners (SPH)

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

Risk and Volatility

Hess has a beta of 1.76, indicating that its stock price is 76% more volatile than the S&P 500. Comparatively, Suburban Propane Partners has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.

Valuation and Earnings

This table compares Hess 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
Hess $4.84 billion 3.18 -$6.13 billion ($20.20) -2.40
Suburban Propane Partners $1.19 billion 1.22 $37.99 million $0.62 37.95

Suburban Propane Partners has lower revenue, but higher earnings than Hess. Hess 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.

Institutional & Insider Ownership

89.1% of Hess shares are owned by institutional investors. Comparatively, 25.8% of Suburban Propane Partners shares are owned by institutional investors. 11.8% of Hess shares are owned by insiders. Comparatively, 0.6% of Suburban Propane Partners shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for Hess and Suburban Propane Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hess 3 8 6 0 2.18
Suburban Propane Partners 0 1 1 0 2.50

Hess presently has a consensus price target of $50.72, suggesting a potential upside of 4.67%. Suburban Propane Partners has a consensus price target of $26.00, suggesting a potential upside of 10.50%. Given Suburban Propane Partners’ stronger consensus rating and higher probable upside, analysts clearly believe Suburban Propane Partners is more favorable than Hess.

Dividends

Hess pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Suburban Propane Partners pays an annual dividend of $2.40 per share and has a dividend yield of 10.2%. Hess pays out -5.0% of its earnings in the form of a dividend. Suburban Propane Partners pays out 387.1% 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 has increased its dividend for 2 consecutive years. Suburban Propane Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Hess -113.21% -9.30% -5.05%
Suburban Propane Partners 3.20% 5.81% 1.70%

Summary

Suburban Propane Partners beats Hess on 10 of the 17 factors compared between the two stocks.

Hess Company Profile

Hess Corporation is an exploration and production company. The Company is engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids (NGL) and natural gas. The Company’s segments include Exploration and Production, and Bakken Midstream. Its Exploration and Production segment explores for, develops, produces, purchases and sells crude oil, NGLs and natural gas with production operations primarily in the United States, Denmark, the Malaysia/Thailand Joint Development Area (JDA), Malaysia and Norway. The Bakken Midstream segment provides fee-based services, including crude oil and natural gas gathering, processing of natural gas and the fractionation of NGLs, transportation of crude oil by rail car, terminaling and loading crude oil and NGLs, and the storage and terminaling of propane, primarily in the Bakken shale play of North Dakota.

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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