Contrasting Kinder Morgan (NYSE:KMI) & Teekay Tankers (NYSE:TNK)

Kinder Morgan (NYSE:KMI) and Teekay Tankers (NYSE:TNK) are both 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.

Analyst Recommendations

This is a summary of current ratings and price targets for Kinder Morgan and Teekay Tankers, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kinder Morgan	0	10	7	0	2.41
Teekay Tankers	1	3	3	1	2.50

Kinder Morgan currently has a consensus price target of $35.45, indicating a potential upside of 11.46%. Teekay Tankers has a consensus price target of $77.00, indicating a potential downside of 23.52%. Given Kinder Morgan’s higher possible upside, equities analysts clearly believe Kinder Morgan is more favorable than Teekay Tankers.

Earnings and Valuation

This table compares Kinder Morgan and Teekay Tankers”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kinder Morgan	$16.94 billion	4.18	$3.06 billion	$1.56	20.39
Teekay Tankers	$951.80 million	3.65	$351.19 million	$16.97	5.93

Kinder Morgan has higher revenue and earnings than Teekay Tankers. Teekay Tankers is trading at a lower price-to-earnings ratio than Kinder Morgan, indicating that it is currently the more affordable of the two stocks.

Dividends

Kinder Morgan pays an annual dividend of $1.19 per share and has a dividend yield of 3.7%. Teekay Tankers pays an annual dividend of $1.00 per share and has a dividend yield of 1.0%. Kinder Morgan pays out 76.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Teekay Tankers pays out 5.9% of its earnings in the form of a dividend. Kinder Morgan has increased its dividend for 9 consecutive years and Teekay Tankers has increased its dividend for 2 consecutive years. Kinder Morgan is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Kinder Morgan has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Teekay Tankers has a beta of -0.19, suggesting that its stock price is 119% less volatile than the S&P 500.

Insider and Institutional Ownership

62.5% of Kinder Morgan shares are held by institutional investors. Comparatively, 52.7% of Teekay Tankers shares are held by institutional investors. 12.7% of Kinder Morgan shares are held by company insiders. Comparatively, 1.9% of Teekay Tankers 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.

Profitability

This table compares Kinder Morgan and Teekay Tankers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kinder Morgan	19.31%	10.46%	4.65%
Teekay Tankers	51.35%	22.11%	20.23%

Summary

Kinder Morgan beats Teekay Tankers on 11 of the 18 factors compared between the two stocks.

About Kinder Morgan

Kinder Morgan, Inc. operates as an energy infrastructure company primarily in North America. The company operates through Natural Gas Pipelines, Products Pipelines, Terminals, and CO2 segments. The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipeline, and storage systems; natural gas gathering systems and natural gas processing and treating facilities; natural gas liquids fractionation facilities and transportation systems; and liquefied natural gas gasification, liquefaction, and storage facilities. The Products Pipelines segment owns and operates refined petroleum products, and crude oil and condensate pipelines; and associated product terminals and petroleum pipeline transmix facilities. The Terminals segment owns and/or operates liquids and bulk terminals that stores and handles various commodities, including gasoline, diesel fuel, renewable fuel and feedstocks, chemicals, ethanol, metals, and petroleum coke; and owns tankers. The CO2 segment produces, transports, and markets CO2 to recovery and production crude oil from mature oil fields; owns interests in/or operates oil fields and gasoline processing plants; and operates a crude oil pipeline system in West Texas, as well as owns and operates RNG and LNG facilities. It owns and operates approximately 82,000 miles of pipelines and 139 terminals. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan, Inc. in February 2011. Kinder Morgan, Inc. was incorporated in 2006 and is headquartered in Houston, Texas.

About Teekay Tankers

Teekay Tankers Ltd. provides crude oil and other marine transportation services to oil industries in Bermuda and internationally. The company offers voyage and time charter services; offshore ship-to-ship transfer services of commodities primarily crude oil and refined oil products; and tanker commercial and technical management services. It also engages management of vessels, procurement, and equipment rental businesses. Teekay Tankers Ltd. was incorporated in 2007 and is headquartered in Hamilton, Bermuda.