Head to Head Survey: Shell Midstream Partners (SHLX) versus ONEOK (OKE)

Shell Midstream Partners (NYSE: SHLX) and ONEOK (NYSE:OKE) are both mid-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, institutional ownership, profitability and analyst recommendations.

Dividends

Shell Midstream Partners pays an annual dividend of $1.27 per share and has a dividend yield of 4.2%. ONEOK pays an annual dividend of $2.98 per share and has a dividend yield of 5.3%. 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. ONEOK pays out 186.3% 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 15 consecutive years and ONEOK has raised its dividend for 2 consecutive years.

Insider and Institutional Ownership

53.0% of Shell Midstream Partners shares are held by institutional investors. Comparatively, 70.9% of ONEOK shares are held by institutional investors. 1.0% of ONEOK shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Shell Midstream Partners 85.14% 3,826.80% 27.98%
ONEOK 3.76% 9.25% 2.53%

Earnings and Valuation

This table compares Shell Midstream Partners and ONEOK’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shell Midstream Partners $291.30 million 19.40 $244.90 million $1.27 23.69
ONEOK $8.92 billion 2.44 $352.03 million $1.60 35.04

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

Analyst Ratings

This is a summary of recent ratings and target prices for Shell Midstream Partners and ONEOK, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shell Midstream Partners 0 2 5 0 2.71
ONEOK 0 8 5 0 2.38

Shell Midstream Partners presently has a consensus price target of $33.71, indicating a potential upside of 12.04%. ONEOK has a consensus price target of $58.42, indicating a potential upside of 4.20%. Given Shell Midstream Partners’ stronger consensus rating and higher possible upside, research analysts clearly believe Shell Midstream Partners is more favorable than ONEOK.

Volatility & Risk

Shell Midstream Partners has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, ONEOK has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.

About Shell Midstream Partners

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.

About ONEOK

ONEOK, Inc. is an energy midstream service provider in the United States. The Company owns and operates natural gas liquids (NGL) systems, and is engaged in the gathering, processing, storage and transportation of natural gas. THe Company’s operations include a 38,000-mile integrated network of NGL and natural gas pipelines, processing plants, fractionators and storage facilities in the Mid-Continent, Williston, Permian and Rocky Mountain regions. The Company operates through three business segments. The Natural Gas Gathering and Processing segment provides midstream services to contracted producers in North Dakota, Montana, Wyoming, Kansas and Oklahoma. The Natural Gas Liquids segment owns and operates facilities that gather, fractionate, treat and distribute NGLs and store NGL products primarily in the Mid-Continental, Permian Basin and the Rocky Mountain regions. The Natural Gas Pipelines segment provides transportation and storage services to end users.

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