Analyzing TransCanada Corporation (TRP) & EQT Midstream Partners, (EQM)

TransCanada Corporation (NYSE: TRP) and EQT Midstream Partners, (NYSE:EQM) are both mid-cap oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.

Valuation and Earnings

This table compares TransCanada Corporation and EQT Midstream Partners,’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TransCanada Corporation $11.04 billion 3.89 $5.22 billion $0.86 57.31
EQT Midstream Partners, $774.18 million 7.66 $623.10 million $5.17 14.24

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

Dividends

TransCanada Corporation pays an annual dividend of $1.85 per share and has a dividend yield of 3.8%. EQT Midstream Partners, pays an annual dividend of $3.74 per share and has a dividend yield of 5.1%. TransCanada Corporation pays out 215.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EQT Midstream Partners, pays out 72.3% of its earnings in the form of a dividend. EQT Midstream Partners, has raised its dividend for 4 consecutive years. EQT Midstream Partners, is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares TransCanada Corporation and EQT Midstream Partners,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TransCanada Corporation 8.16% 12.08% 3.04%
EQT Midstream Partners, 66.99% 25.61% 16.75%

Insider and Institutional Ownership

56.1% of TransCanada Corporation shares are owned by institutional investors. Comparatively, 75.7% of EQT Midstream Partners, shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and recommmendations for TransCanada Corporation and EQT Midstream Partners,, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TransCanada Corporation 0 0 9 0 3.00
EQT Midstream Partners, 0 3 4 0 2.57

TransCanada Corporation currently has a consensus price target of $65.21, indicating a potential upside of 32.29%. EQT Midstream Partners, has a consensus price target of $91.00, indicating a potential upside of 23.62%. Given TransCanada Corporation’s stronger consensus rating and higher possible upside, research analysts plainly believe TransCanada Corporation is more favorable than EQT Midstream Partners,.

Risk & Volatility

TransCanada Corporation has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, EQT Midstream Partners, has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500.

Summary

EQT Midstream Partners, beats TransCanada Corporation on 10 of the 16 factors compared between the two stocks.

TransCanada Corporation Company Profile

TransCanada Corporation is an energy infrastructure company. The Company is engaged in the development and operation of North American energy infrastructure, including natural gas and liquids pipelines, power generation and natural gas storage facilities. Its segments include Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Energy. The Company operates in three businesses: Natural Gas Pipelines, Liquids Pipelines and Energy. The Natural Gas Pipelines and Liquids Pipelines segments principally consist of its respective natural gas and liquids pipelines in Canada, the United States and Mexico, as well as its regulated natural gas storage operations in the United States. The Energy segment includes its power operations and the non-regulated natural gas storage business in Canada. TransCanada PipeLines Limited (TCPL) is its principal operating subsidiary.

EQT Midstream Partners, Company Profile

EQT Midstream Partners, LP (EQM) owns, operates, acquires and develops midstream assets in the Appalachian Basin. The Company’s segments include Gathering and Transmission. The Gathering segment primarily includes high pressure gathering lines and the Federal Energy Regulatory Commission (FERC)-regulated low pressure gathering system. Transmission includes EQM’s FERC-regulated interstate pipeline and storage business. The Company’s operations are primarily focused in southwestern Pennsylvania and northern West Virginia. As of December 31, 2016, the Company provided midstream services to EQT Corporation (EQT) and a range of third parties across 24 counties in Pennsylvania, West Virginia and Ohio through its two assets: the gathering system, which delivered natural gas from wells and other receipt points to transmission pipelines, and the transmission and storage system, which served as a header system transmission pipeline.

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