Financial Analysis: TC PipeLines, (TCP) vs. Antero Midstream Partners (AM)

Antero Midstream Partners (NYSE: AM) and TC PipeLines, (NYSE:TCP) are both mid-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.

Dividends

Antero Midstream Partners pays an annual dividend of $1.28 per share and has a dividend yield of 4.1%. TC PipeLines, pays an annual dividend of $4.00 per share and has a dividend yield of 7.5%. Antero Midstream Partners pays out 86.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TC PipeLines, pays out 127.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Antero Midstream Partners has raised its dividend for 7 consecutive years.

Institutional and Insider Ownership

43.2% of Antero Midstream Partners shares are owned by institutional investors. Comparatively, 60.6% of TC PipeLines, shares are owned by institutional investors. 7.9% of Antero Midstream Partners shares are owned by company insiders. Comparatively, 0.1% of TC PipeLines, shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Antero Midstream Partners and TC PipeLines,, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Antero Midstream Partners 0 0 13 0 3.00
TC PipeLines, 1 3 1 0 2.00

Antero Midstream Partners presently has a consensus target price of $38.82, suggesting a potential upside of 22.84%. TC PipeLines, has a consensus target price of $62.75, suggesting a potential upside of 17.42%. Given Antero Midstream Partners’ stronger consensus rating and higher possible upside, analysts plainly believe Antero Midstream Partners is more favorable than TC PipeLines,.

Risk & Volatility

Antero Midstream Partners has a beta of 1.92, indicating that its stock price is 92% more volatile than the S&P 500. Comparatively, TC PipeLines, has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.

Profitability

This table compares Antero Midstream Partners and TC PipeLines,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Antero Midstream Partners 41.15% 21.03% 11.40%
TC PipeLines, 62.63% 19.77% 7.16%

Valuation & Earnings

This table compares Antero Midstream Partners and TC PipeLines,’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Antero Midstream Partners $682.01 million 8.64 $455.28 million $1.48 21.35
TC PipeLines, $481.00 million 7.71 $399.00 million $3.13 17.07

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

Summary

Antero Midstream Partners beats TC PipeLines, on 13 of the 17 factors compared between the two stocks.

Antero Midstream Partners Company Profile

Antero Midstream Partners LP is a limited partnership formed by Antero Resources Corporation (Antero Resources) to own, operate and develop midstream energy assets to service Antero Resources’ production. The Company’s segments include gathering and compression, and water handling and treatment. The gathering and compression segment includes a network of gathering pipelines, compressor stations, and processing and fractionation plants that collect and process natural gas, natural gas liquids (NGLs) and oil from Antero Resources’ wells in West Virginia and Ohio. Its water handling and treatment segment includes two independent fresh water distribution systems from sources including the Ohio River, local reservoirs, as well as several regional waterways. The water handling and treatment segment also includes other fluid handling services which includes, high rate transfer, wastewater transportation, disposal and treatment.

TC PipeLines, Company Profile

TC PipeLines, LP is a master limited partnership. The Company acquires, owns and participates in the management of energy infrastructure businesses in North America. The Company’s pipeline systems transport natural gas in the United States. As of December 31, 2016, the Company had four pipelines and equity ownership interests in three natural gas interstate pipeline systems that are collectively designed to transport approximately 9.1 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. The Company’s pipeline systems include Gas Transmission Northwest LLC (GTN), Bison Pipeline LLC (Bison), North Baja Pipeline, LLC (North Baja), Tuscarora Gas Transmission Company (Tuscarora), Northern Border Pipeline Company (Northern Border), Portland Natural Gas Transmission System (PNGTS), and Great Lakes Gas Transmission Limited Partnership (Great Lakes).

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