SemGroup (NYSE: SEMG) and Magellan Midstream Partners (NYSE:MMP) are both mid-cap oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.
Volatility & Risk
SemGroup has a beta of 2.04, suggesting that its stock price is 104% more volatile than the S&P 500. Comparatively, Magellan Midstream Partners has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.
This table compares SemGroup and Magellan Midstream Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Magellan Midstream Partners||34.50%||40.99%||12.58%|
Institutional and Insider Ownership
98.0% of SemGroup shares are owned by institutional investors. Comparatively, 62.0% of Magellan Midstream Partners shares are owned by institutional investors. 0.8% of SemGroup shares are owned by insiders. Comparatively, 0.2% of Magellan Midstream Partners shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This is a summary of current ratings and recommmendations for SemGroup and Magellan Midstream Partners, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Magellan Midstream Partners||1||7||4||0||2.25|
SemGroup presently has a consensus price target of $28.75, suggesting a potential downside of 3.36%. Magellan Midstream Partners has a consensus price target of $78.27, suggesting a potential upside of 12.44%. Given Magellan Midstream Partners’ higher possible upside, analysts clearly believe Magellan Midstream Partners is more favorable than SemGroup.
Valuation and Earnings
This table compares SemGroup and Magellan Midstream Partners’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|SemGroup||$1.33 billion||1.76||$2.09 million||($0.08)||-371.88|
|Magellan Midstream Partners||$2.21 billion||7.20||$802.77 million||$3.70||18.81|
Magellan Midstream Partners has higher revenue and earnings than SemGroup. SemGroup is trading at a lower price-to-earnings ratio than Magellan Midstream Partners, indicating that it is currently the more affordable of the two stocks.
SemGroup pays an annual dividend of $1.80 per share and has a dividend yield of 6.1%. Magellan Midstream Partners pays an annual dividend of $3.62 per share and has a dividend yield of 5.2%. SemGroup pays out -2,250.0% of its earnings in the form of a dividend. Magellan Midstream Partners pays out 97.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SemGroup has increased its dividend for 3 consecutive years and Magellan Midstream Partners has increased its dividend for 7 consecutive years. SemGroup is clearly the better dividend stock, given its higher yield and lower payout ratio.
Magellan Midstream Partners beats SemGroup on 11 of the 17 factors compared between the two stocks.
SemGroup Company Profile
SemGroup Corporation is a provider of gathering, transportation, storage, distribution, marketing and other midstream services to producers, refiners of petroleum products and other market participants located in the Midwest and Rocky Mountain regions of the United States and Canada. The Company’s segments include Crude Transportation, which operates crude oil pipelines and truck transportation businesses in the United States; Crude Facilities, which operates crude oil storage and terminal businesses in the United States; Crude Supply and Logistics, which operates a crude oil marketing business; SemGas, which provides natural gas gathering and processing services; SemCAMS, which operates natural gas processing and gathering facilities in Alberta, Canada; SemLogistics, which owns petroleum products storage facility in the United Kingdom, and SemMexico, which provides liquid asphalt cement products and product application services to the Mexican market, and Corporate and Other.
Magellan Midstream Partners Company Profile
Magellan Midstream Partners, L.P. is principally engaged in the transportation, storage and distribution of refined petroleum products and crude oil. The Company operates through three segments: refined products, crude oil and marine storage. As of December 31, 2016, its asset portfolio, including the assets of its joint ventures, consisted of its refined products segment, consisting 9,700-mile refined products pipeline system with 53 terminals, as well as 26 independent terminals not connected to its pipeline system and its 1,100-mile ammonia pipeline system; its crude oil segment, consisted of approximately 2,200 miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately 26 million barrels, of which 16 million are used for contract storage, and its marine storage segment, consisted of five marine terminals located along coastal waterways with an aggregate storage capacity of approximately 26 million barrels.
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