Critical Analysis: JP Energy Partners (JPEP) & Atmos Energy Corporation (ATO)

JP Energy Partners (NYSE: JPEP) and Atmos Energy Corporation (NYSE:ATO) are both utilities companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Risk & Volatility

JP Energy Partners has a beta of 3.3, meaning that its share price is 230% more volatile than the S&P 500. Comparatively, Atmos Energy Corporation has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.

Earnings & Valuation

This table compares JP Energy Partners and Atmos Energy Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
JP Energy Partners N/A N/A N/A ($1.59) -5.94
Atmos Energy Corporation $3.62 billion 2.55 $1.04 billion $3.74 23.30

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

Insider & Institutional Ownership

53.4% of JP Energy Partners shares are owned by institutional investors. Comparatively, 72.1% of Atmos Energy Corporation shares are owned by institutional investors. 1.6% of Atmos Energy Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

JP Energy Partners pays an annual dividend of $1.30 per share and has a dividend yield of 13.8%. Atmos Energy Corporation pays an annual dividend of $1.80 per share and has a dividend yield of 2.1%. JP Energy Partners pays out -81.8% of its earnings in the form of a dividend. Atmos Energy Corporation pays out 48.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Atmos Energy Corporation has raised its dividend for 34 consecutive years. JP Energy Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and price targets for JP Energy Partners and Atmos Energy Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
JP Energy Partners 0 1 1 0 2.50
Atmos Energy Corporation 1 0 3 0 2.50

JP Energy Partners presently has a consensus price target of $11.00, indicating a potential upside of 16.53%. Atmos Energy Corporation has a consensus price target of $86.25, indicating a potential downside of 1.04%. Given JP Energy Partners’ higher probable upside, equities analysts plainly believe JP Energy Partners is more favorable than Atmos Energy Corporation.

Profitability

This table compares JP Energy Partners and Atmos Energy Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
JP Energy Partners -5.61% -5.99% -4.01%
Atmos Energy Corporation N/A 10.59% 3.80%

Summary

Atmos Energy Corporation beats JP Energy Partners on 9 of the 13 factors compared between the two stocks.

About JP Energy Partners

JP Energy Partners LP owns, operates, develops and acquires a portfolio of midstream energy assets. The Company provides midstream infrastructure solutions for the supply of crude oil, refined products and natural gas liquids (NGLs) in the United States. The Company’s segments include crude oil pipelines and storage, refined products terminals and storage, and NGL distribution and sales. The Company’s crude oil businesses are situated in areas, including the Permian Basin and Eagle Ford shale. Its crude oil pipelines and storage segment manages the physical movement of crude oil from origination to final destination through its network of owned and leased assets. Its refined product terminals and storage segment consists of approximately two refined products terminals located in North Little Rock, Arkansas and Caddo Mills, Texas. The Company’s NGL distribution and sales segment involves the retail, commercial and wholesale sale of NGLs and other refined products.

About Atmos Energy Corporation

Atmos Energy Corporation is engaged primarily in the regulated natural gas distribution and pipeline businesses, as well as other nonregulated natural gas businesses. The Company operates through three segments: regulated distribution segment, which includes its regulated distribution and related sales operations; regulated pipeline segment, which includes the pipeline and storage operations of its Atmos Pipeline-Texas Division, and nonregulated segment, which includes its nonregulated natural gas management, nonregulated natural gas transmission, storage and other services. The Company’s nonregulated businesses provide natural gas management, marketing, transportation and storage services to municipalities, local gas distribution companies, including certain of its natural gas distribution divisions and industrial customers principally in the Midwest and Southeast.

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