Head-To-Head Review: Williams Companies (WMB) versus TC Pipelines (TCP)

Williams Companies (NYSE: WMB) and TC Pipelines (NYSE:TCP) are both oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.

Dividends

Williams Companies pays an annual dividend of $1.36 per share and has a dividend yield of 5.0%. TC Pipelines pays an annual dividend of $2.60 per share and has a dividend yield of 10.3%. Williams Companies pays out 215.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TC Pipelines pays out 82.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TC Pipelines has increased its dividend for 8 consecutive years. TC Pipelines is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Williams Companies and TC Pipelines’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Williams Companies $8.03 billion 2.80 $2.17 billion $0.63 43.11
TC Pipelines $422.00 million 4.29 $252.00 million $3.16 8.03

Williams Companies has higher revenue and earnings than TC Pipelines. TC Pipelines is trading at a lower price-to-earnings ratio than Williams Companies, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings for Williams Companies and TC Pipelines, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Williams Companies 0 2 13 0 2.87
TC Pipelines 3 6 0 0 1.67

Williams Companies presently has a consensus target price of $33.08, suggesting a potential upside of 21.79%. TC Pipelines has a consensus target price of $45.88, suggesting a potential upside of 80.90%. Given TC Pipelines’ higher possible upside, analysts plainly believe TC Pipelines is more favorable than Williams Companies.

Profitability

This table compares Williams Companies and TC Pipelines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Williams Companies 24.02% 3.61% 1.19%
TC Pipelines 63.76% 25.66% 7.60%

Risk & Volatility

Williams Companies has a beta of 1.41, suggesting that its share price is 41% more volatile than the S&P 500. Comparatively, TC Pipelines has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500.

Insider & Institutional Ownership

85.8% of Williams Companies shares are held by institutional investors. Comparatively, 67.7% of TC Pipelines shares are held by institutional investors. 0.5% of Williams Companies shares are held by insiders. Comparatively, 0.1% of TC Pipelines shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

TC Pipelines beats Williams Companies on 9 of the 17 factors compared between the two stocks.

About Williams Companies

The Williams Companies, Inc. operates as an energy infrastructure company primarily in the United States. It owns and operates natural gas pipeline system extending from Texas, Louisiana, Mississippi, and the Gulf of Mexico through Alabama, Georgia, South Carolina, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, and New Jersey to the New York City metropolitan area. The company also owns and operates a natural gas pipeline system extending from the San Juan basin in northwestern New Mexico and southwestern Colorado through Colorado, Utah, Wyoming, Idaho, Oregon, and Washington to a point on the Canadian border near Sumas, Washington; gulfstream natural gas pipeline system extending from the Mobile Bay area in Alabama to markets in Florida; and constitution pipeline that would connect its gathering system in Susquehanna County, Pennsylvania to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in New York. In addition, it provides natural gas gathering, treating, processing, and compression services; natural gas liquids production, fractionation, storage, marketing, and transportation services; and deepwater production handling and crude oil transportation services. The company transports and stores natural gas to local natural gas distribution companies, municipal utilities, direct industrial users, electric power generators, and natural gas marketers and producers. As of December 31, 2017, it owned and operated approximately 13,600 miles of pipelines. The Williams Companies, Inc. was founded in 1908 and is headquartered in Tulsa, Oklahoma.

About TC Pipelines

TC PipeLines, LP acquires, owns, and participates in the management of energy infrastructure businesses in North America. The company has interests in eight natural gas interstate pipeline systems that transport approximately 10.4 billion cubic feet per day of natural gas from producing regions and import facilities to market hubs and consuming markets primarily in the Western, Midwestern, and Eastern United States. It serves large utilities, local distribution companies, natural gas marketers, producing companies, and other interstate pipelines, including affiliates. TC PipeLines GP, Inc. operates as a general partner of the company. TC PipeLines, LP was founded in 1998 and is based in Houston, Texas.

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