Analyzing Southcross Energy Partners (SXE) and Plains GP (PAGP)

Southcross Energy Partners (NYSE: SXE) and Plains GP (NYSE:PAGP) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Volatility and Risk

Southcross Energy Partners has a beta of 3.99, indicating that its share price is 299% more volatile than the S&P 500. Comparatively, Plains GP has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Southcross Energy Partners and Plains GP, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southcross Energy Partners 0 1 0 0 2.00
Plains GP 0 9 8 0 2.47

Plains GP has a consensus price target of $25.88, suggesting a potential upside of 13.29%. Given Plains GP’s stronger consensus rating and higher probable upside, analysts clearly believe Plains GP is more favorable than Southcross Energy Partners.

Insider & Institutional Ownership

3.0% of Southcross Energy Partners shares are held by institutional investors. Comparatively, 83.1% of Plains GP shares are held by institutional investors. 23.8% of Southcross Energy Partners shares are held by company insiders. Comparatively, 39.9% of Plains GP shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Plains GP pays an annual dividend of $1.20 per share and has a dividend yield of 5.3%. Southcross Energy Partners does not pay a dividend. Plains GP pays out 272.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southcross Energy Partners has raised its dividend for 4 consecutive years and Plains GP has raised its dividend for 3 consecutive years.

Profitability

This table compares Southcross Energy Partners and Plains GP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southcross Energy Partners -13.74% -16.59% -7.83%
Plains GP 0.25% 0.50% 0.22%

Valuation & Earnings

This table compares Southcross Energy Partners and Plains GP’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southcross Energy Partners $548.72 million 0.27 -$94.94 million ($1.63) -1.13
Plains GP $20.18 billion 0.18 $94.00 million $0.44 51.91

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

Summary

Plains GP beats Southcross Energy Partners on 13 of the 17 factors compared between the two stocks.

Southcross Energy Partners Company Profile

Southcross Energy Partners, L.P. provides natural gas gathering, processing, treating, compression and transportation services and natural gas liquid (NGL) fractionation and transportation services. The Company also sources, purchases, transports and sells natural gas and NGLs. Its assets are located in South Texas, Mississippi and Alabama As of December 31, 2016, its assets consisted of gathering systems, intrastate pipelines, two natural gas processing plants, one fractionation facility, 20 compressor stations and a treating system. Its gathering systems and intrastate pipelines include South Texas and Mississippi/Alabama. The assets in its South Texas region are located between Montgomery County, which is north of Houston, and Webb and Dimmit Counties near the Texas-Mexico border. The assets in its Mississippi region are located principally in the southern half of the state and consist of intrastate pipeline system in Mississippi.

Plains GP Company Profile

Plains GP Holdings, L.P. owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids (NGL), natural gas and refined products. The Company operates through three segments: Transportation, Facilities, and Supply and Logistics. Through its three business segments, the Company is engaged in the transportation, storage, terminaling and marketing of crude oil, NGL and natural gas. The Transportation segment operations consist of fee-based activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. The Facilities segment operations consist of fee-based activities associated with providing storage, terminaling and throughput services for crude oil, refined products, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. The Supply and Logistics segment operations consist of the merchant-related activities.

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