Magellan Midstream Partners (NYSE: MMP) and Shell Midstream Partners (NYSE:SHLX) are both mid-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.
This table compares Magellan Midstream Partners and Shell Midstream Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Magellan Midstream Partners||34.50%||40.99%||12.58%|
|Shell Midstream Partners||85.14%||3,826.80%||27.98%|
This table compares Magellan Midstream Partners and Shell Midstream Partners’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Magellan Midstream Partners||$2.21 billion||7.18||$802.77 million||$3.70||18.77|
|Shell Midstream Partners||$291.30 million||18.99||$244.90 million||$1.27||23.20|
Magellan Midstream Partners has higher revenue and earnings than Shell Midstream Partners. Magellan Midstream Partners is trading at a lower price-to-earnings ratio than Shell Midstream Partners, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations and price targets for Magellan Midstream Partners and Shell Midstream Partners, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Magellan Midstream Partners||1||7||4||0||2.25|
|Shell Midstream Partners||0||2||5||0||2.71|
Magellan Midstream Partners presently has a consensus price target of $78.27, indicating a potential upside of 12.70%. Shell Midstream Partners has a consensus price target of $33.71, indicating a potential upside of 14.44%. Given Shell Midstream Partners’ stronger consensus rating and higher probable upside, analysts clearly believe Shell Midstream Partners is more favorable than Magellan Midstream Partners.
Risk & Volatility
Magellan Midstream Partners has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Shell Midstream Partners has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500.
Magellan Midstream Partners pays an annual dividend of $3.62 per share and has a dividend yield of 5.2%. Shell Midstream Partners pays an annual dividend of $1.27 per share and has a dividend yield of 4.3%. Magellan Midstream Partners pays out 97.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners has raised its dividend for 7 consecutive years. Magellan Midstream Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
62.0% of Magellan Midstream Partners shares are held by institutional investors. Comparatively, 53.0% of Shell Midstream Partners shares are held by institutional investors. 0.2% of Magellan Midstream Partners shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Shell Midstream Partners beats Magellan Midstream Partners on 10 of the 17 factors compared between the two stocks.
Magellan Midstream Partners Company Profile
Magellan Midstream Partners, L.P. is principally engaged in the transportation, storage and distribution of refined petroleum products and crude oil. The Company operates through three segments: refined products, crude oil and marine storage. As of December 31, 2016, its asset portfolio, including the assets of its joint ventures, consisted of its refined products segment, consisting 9,700-mile refined products pipeline system with 53 terminals, as well as 26 independent terminals not connected to its pipeline system and its 1,100-mile ammonia pipeline system; its crude oil segment, consisted of approximately 2,200 miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately 26 million barrels, of which 16 million are used for contract storage, and its marine storage segment, consisted of five marine terminals located along coastal waterways with an aggregate storage capacity of approximately 26 million barrels.
Shell Midstream Partners Company Profile
Shell Midstream Partners, L.P. is a master limited partnership company, which owns, operates, develops and acquires pipelines and other midstream assets. The Company conducts its operations through its subsidiary, Shell Midstream Operating, LLC. Its assets consist of interests in entities that own crude oil and refined products pipelines serving as key infrastructure to transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and to deliver refined products from those markets to demand centers. As of December 31, 2016, it owned interests in seven crude oil pipeline systems, three refined products systems, one natural gas gathering pipeline system and a crude tank storage and terminal system. Its pipeline and terminal systems include Zydeco crude oil system, Auger crude oil system, Mars crude oil system, Bengal product system, Poseidon crude oil system, Odyssey crude oil system, Proteus crude oil system and Endymion crude oil system.
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