Critical Contrast: Summit Midstream Partners (SMLP) and ONEOK (OKE)

Summit Midstream Partners (NYSE: SMLP) and ONEOK (NYSE:OKE) are both energy companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, risk, valuation, earnings, analyst recommendations, institutional ownership and profitability.

Dividends

Summit Midstream Partners pays an annual dividend of $2.30 per share and has a dividend yield of 10.2%. ONEOK pays an annual dividend of $2.98 per share and has a dividend yield of 5.1%. Summit Midstream Partners pays out 157.5% 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. Summit Midstream Partners has increased its dividend for 15 consecutive years and ONEOK has increased its dividend for 4 consecutive years. Summit Midstream Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Summit Midstream Partners and ONEOK’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Summit Midstream Partners $402.36 million 4.17 -$40.91 million $1.46 15.41
ONEOK $8.92 billion 2.55 $352.03 million $1.60 36.52

ONEOK has higher revenue and earnings than Summit Midstream Partners. Summit 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.

Institutional and Insider Ownership

48.8% of Summit 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 large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Summit Midstream Partners has a beta of 1.65, suggesting that its share price is 65% more volatile than the S&P 500. Comparatively, ONEOK has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Summit Midstream Partners and ONEOK, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Summit Midstream Partners 1 1 3 0 2.40
ONEOK 0 9 6 0 2.40

Summit Midstream Partners presently has a consensus target price of $25.00, indicating a potential upside of 11.11%. ONEOK has a consensus target price of $58.50, indicating a potential upside of 0.12%. Given Summit Midstream Partners’ higher probable upside, equities analysts plainly believe Summit Midstream Partners is more favorable than ONEOK.

Profitability

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

Net Margins Return on Equity Return on Assets
Summit Midstream Partners 24.14% 11.61% 4.31%
ONEOK 3.76% 9.25% 2.53%

Summary

Summit Midstream Partners beats ONEOK on 9 of the 16 factors compared between the two stocks.

Summit Midstream Partners Company Profile

Summit Midstream Partners, LP focuses on developing, owning and operating midstream energy infrastructure assets. The Company’s segments include the Utica Shale, which includes its ownership interest in Ohio Gathering, as well as Summit Utica; the Williston Basin, which includes Bison Midstream, Polar and Divide and Tioga Midstream; the Marcellus Shale, which includes Mountaineer Midstream; the Barnett Shale, which includes DFW Midstream Services LLC (DFW Midstream), and the Piceance Basin /DJ Basins, which includes Grand River and Niobrara G&P. The Company’s assets are located in the producing areas of unconventional resource basins, primarily shale formations, in the continental United States. It provides natural gas gathering, treating and processing services, as well as crude oil and produced water gathering services pursuant to long-term and fee-based agreements with its customers.

ONEOK Company Profile

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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