Reviewing Pembina Pipeline (PBA) & Noble Midstream Partners (NBLX)

Pembina Pipeline (NYSE: PBA) and Noble Midstream Partners (NYSE:NBLX) are both mid-cap energy companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Insider & Institutional Ownership

42.3% of Pembina Pipeline shares are held by institutional investors. Comparatively, 75.8% of Noble Midstream Partners shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Pembina Pipeline pays an annual dividend of $1.68 per share and has a dividend yield of 4.6%. Noble Midstream Partners pays an annual dividend of $1.87 per share and has a dividend yield of 3.6%. Pembina Pipeline pays out 169.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Noble Midstream Partners pays out 46.6% of its earnings in the form of a dividend. Pembina Pipeline has increased its dividend for 2 consecutive years. Pembina Pipeline is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings and price targets for Pembina Pipeline and Noble Midstream Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pembina Pipeline 0 1 3 0 2.75
Noble Midstream Partners 0 2 7 0 2.78

Noble Midstream Partners has a consensus target price of $53.63, indicating a potential upside of 2.73%. Given Noble Midstream Partners’ stronger consensus rating and higher possible upside, analysts clearly believe Noble Midstream Partners is more favorable than Pembina Pipeline.

Earnings & Valuation

This table compares Pembina Pipeline and Noble Midstream Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pembina Pipeline $3.22 billion 5.71 $351.92 million $0.99 36.99
Noble Midstream Partners $160.72 million 7.54 $74.44 million $4.01 13.02

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

Profitability

This table compares Pembina Pipeline and Noble Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pembina Pipeline 11.66% 8.36% 3.65%
Noble Midstream Partners 55.83% 36.74% 24.51%

Summary

Noble Midstream Partners beats Pembina Pipeline on 10 of the 15 factors compared between the two stocks.

About Pembina Pipeline

Pembina Pipeline Corporation is an energy transportation and service provider. The Company operates through four segments. The Conventional Pipelines segment consists of the tariff-based operations of pipelines and related facilities to deliver crude oil, condensate and natural gas liquids (NGL) in Alberta, British Columbia, Saskatchewan, and North Dakota, United States. The Oil Sands & Heavy Oil segment consists of the Syncrude, Horizon, Nipisi and Mitsue Pipelines, and the Cheecham Lateral. These pipelines and related facilities deliver synthetic crude oil produced from oil sands under long-term cost-of-service arrangements. The Gas Services segment consists of natural gas gathering and processing facilities. The Midstream segment consists of the Company’s interests in extraction and fractionation facilities, terminalling and storage hub services under a mixture of short, medium and long-term contractual arrangements.

About Noble Midstream Partners

Noble Midstream Partners LP is engaged in owning, operating, developing and acquiring a range of domestic midstream infrastructure assets. The Company’s areas of focus are in the area of Denver-Julesburg (DJ) Basin in Colorado and the Southern Delaware Basin position of the Permian Basin in Texas (Delaware Basin). Its segments include Gathering Systems, Fresh Water Delivery, and Investments in White Cliffs and Other. The Gathering Systems segment includes crude oil, natural gas and produced water gathering, as well as crude oil treating. It holds interest in White Cliffs Pipeline L.L.C. (the White Cliffs Interest). The Investments in White Cliffs and Other segment includes activity associated with the White Cliffs Interest. As of December 31, 2016, the White Cliffs Pipeline system consisted of two 527-mile crude oil pipelines that extended from the DJ Basin to the Cushing, Oklahoma. It provides crude oil, natural gas, and water-related midstream services for Noble Energy, Inc.

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