Southcross Energy Partners (NYSE: SXE) and Targa Resources (NYSE:TRGP) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.
Insider and Institutional Ownership
3.3% of Southcross Energy Partners shares are held by institutional investors. Comparatively, 88.7% of Targa Resources shares are held by institutional investors. 23.8% of Southcross Energy Partners shares are held by company insiders. Comparatively, 1.9% of Targa Resources shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Southcross Energy Partners and Targa Resources’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Southcross Energy Partners||$548.72 million||0.25||-$94.94 million||($1.21)||-1.46|
|Targa Resources||$8.81 billion||1.17||-$187.30 million||($1.62)||-28.99|
Southcross Energy Partners has higher earnings, but lower revenue than Targa Resources. Targa Resources is trading at a lower price-to-earnings ratio than Southcross Energy Partners, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Southcross Energy Partners has a beta of 4.21, suggesting that its stock price is 321% more volatile than the S&P 500. Comparatively, Targa Resources has a beta of 2.07, suggesting that its stock price is 107% more volatile than the S&P 500.
Targa Resources pays an annual dividend of $3.64 per share and has a dividend yield of 7.7%. Southcross Energy Partners does not pay a dividend. Targa Resources pays out -224.7% of its earnings in the form of a dividend. Targa Resources has increased its dividend for 4 consecutive years.
This table compares Southcross Energy Partners and Targa Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Southcross Energy Partners||-13.74%||-16.59%||-7.83%|
This is a summary of current ratings and price targets for Southcross Energy Partners and Targa Resources, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Southcross Energy Partners||0||1||0||0||2.00|
Targa Resources has a consensus price target of $54.71, indicating a potential upside of 16.47%. Given Targa Resources’ stronger consensus rating and higher possible upside, analysts clearly believe Targa Resources is more favorable than Southcross Energy Partners.
Targa Resources beats Southcross Energy Partners on 13 of the 18 factors compared between the two stocks.
About Southcross Energy Partners
Southcross Energy Partners, L.P. provides natural gas gathering, processing, treating, compression and transportation services and natural gas liquid (NGL) fractionation and transportation services. The Company also sources, purchases, transports and sells natural gas and NGLs. Its assets are located in South Texas, Mississippi and Alabama As of December 31, 2016, its assets consisted of gathering systems, intrastate pipelines, two natural gas processing plants, one fractionation facility, 20 compressor stations and a treating system. Its gathering systems and intrastate pipelines include South Texas and Mississippi/Alabama. The assets in its South Texas region are located between Montgomery County, which is north of Houston, and Webb and Dimmit Counties near the Texas-Mexico border. The assets in its Mississippi region are located principally in the southern half of the state and consist of intrastate pipeline system in Mississippi.
About Targa Resources
Targa Resources Corp. is a midstream energy company in North America. It provides midstream services. Its segments include Gathering and Processing, and Logistics and Marketing (Downstream Business). It is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling natural gas liquids (NGLs) and NGL products, including services to liquefied petroleum gas exporters; gathering, storing and terminalling crude oil, and storing, terminalling and selling refined petroleum products. The Gathering and Processing segment consists of gathering, compressing, dehydrating, treating, conditioning, processing, and marketing natural gas and gathering crude oil. The Logistics and Marketing segment includes all the activities necessary to convert mixed NGLs into NGL products and provides certain services, such as storing, fractionating, terminalling, transporting and marketing of NGLs and NGL products.
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