Contrasting Nustar GP Holdings (NSH) & Holly Energy Partners, L.P. (HEP)

Nustar GP Holdings (NYSE: NSH) and Holly Energy Partners, L.P. (NYSE:HEP) are both oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, analyst recommendations, valuation and risk.

Insider & Institutional Ownership

56.0% of Nustar GP Holdings shares are owned by institutional investors. Comparatively, 47.7% of Holly Energy Partners, L.P. shares are owned by institutional investors. 21.4% of Nustar GP Holdings shares are owned by insiders. Comparatively, 0.8% of Holly Energy Partners, L.P. shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Nustar GP Holdings and Holly Energy Partners, L.P., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nustar GP Holdings 0 7 0 0 2.00
Holly Energy Partners, L.P. 1 3 0 0 1.75

Nustar GP Holdings presently has a consensus target price of $28.00, indicating a potential upside of 25.84%. Holly Energy Partners, L.P. has a consensus target price of $35.33, indicating a potential upside of 8.28%. Given Nustar GP Holdings’ stronger consensus rating and higher possible upside, analysts clearly believe Nustar GP Holdings is more favorable than Holly Energy Partners, L.P..

Risk & Volatility

Nustar GP Holdings has a beta of 1.18, suggesting that its share price is 18% more volatile than the S&P 500. Comparatively, Holly Energy Partners, L.P. has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Profitability

This table compares Nustar GP Holdings and Holly Energy Partners, L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nustar GP Holdings 176.62% 25.68% 22.63%
Holly Energy Partners, L.P. 34.06% 34.14% 8.59%

Valuation & Earnings

This table compares Nustar GP Holdings and Holly Energy Partners, L.P.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Nustar GP Holdings $51.88 million 18.42 $91.06 million $2.12 10.50
Holly Energy Partners, L.P. $419.91 million 5.00 $274.58 million $1.22 26.75

Holly Energy Partners, L.P. has higher revenue and earnings than Nustar GP Holdings. Nustar GP Holdings is trading at a lower price-to-earnings ratio than Holly Energy Partners, L.P., indicating that it is currently the more affordable of the two stocks.

Dividends

Nustar GP Holdings pays an annual dividend of $2.18 per share and has a dividend yield of 9.8%. Holly Energy Partners, L.P. pays an annual dividend of $2.53 per share and has a dividend yield of 7.8%. Nustar GP Holdings pays out 102.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Holly Energy Partners, L.P. pays out 207.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Nustar GP Holdings has raised its dividend for 13 consecutive years. Nustar GP Holdings is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Nustar GP Holdings beats Holly Energy Partners, L.P. on 12 of the 16 factors compared between the two stocks.

Nustar GP Holdings Company Profile

NuStar GP Holdings, LLC holds interests in NuStar Energy L.P. (NuStar Energy). NuStar Energy is engaged in the transportation of petroleum products and anhydrous ammonia, the terminalling and storage of petroleum products and the marketing of petroleum products. NuStar Energy has terminal and storage facilities in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom. The Company manages NuStar Energy through its ownership of NuStar GP, LLC and Riverwalk Holdings, LLC, which own Riverwalk Logistics L.P., the general partner of NuStar Energy.

Holly Energy Partners, L.P. Company Profile

Holly Energy Partners, L.P., (HEP) is engaged in the business of operating a system of petroleum product and crude pipelines, storage tanks, distribution terminals, loading rack facilities and refinery processing units in West Texas, New Mexico, Utah, Nevada, Oklahoma, Wyoming, Kansas, Arizona, Idaho and Washington. The Company operates through segments, including pipelines and terminals segment and a refinery processing unit segment. As of December 31, 2016, its pipelines and terminals segment consisted of 24 main pipeline segments; Crude gathering networks in Texas and New Mexico; 10 refined product terminals; one crude terminal; 8,300 track feet of rail storage located at one facility; seven locations with truck and/or rail racks, and Tankage at all six of HollyFrontier Corporation’s (HFC’s) refining facility locations. As of December 31, 2016, the Company’s refinery processing unit segment consisted of five refinery processing units at two of HFC’s refining facility locations.

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