Financial Survey: Enbridge (NYSE:ENB) vs. Star Group (NYSE:SGU)

Star Group (NYSE:SGU) and Enbridge (NYSE:ENB) are both energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, profitability, risk, institutional ownership and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and price targets for Star Group and Enbridge, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Star Group	0	1	0	0	2.00
Enbridge	0	5	8	1	2.71

Enbridge has a consensus target price of $65.88, indicating a potential upside of 43.38%. Given Enbridge’s stronger consensus rating and higher probable upside, analysts clearly believe Enbridge is more favorable than Star Group.

Valuation and Earnings

This table compares Star Group and Enbridge”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Star Group	$1.78 billion	0.24	$73.50 million	$1.87	6.90
Enbridge	$46.66 billion	2.19	$5.36 billion	$1.87	24.57

Enbridge has higher revenue and earnings than Star Group. Star Group is trading at a lower price-to-earnings ratio than Enbridge, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

40.4% of Star Group shares are owned by institutional investors. Comparatively, 54.6% of Enbridge shares are owned by institutional investors. 20.4% of Star Group shares are owned by insiders. Comparatively, 0.4% of Enbridge shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Star Group pays an annual dividend of $0.79 per share and has a dividend yield of 6.1%. Enbridge pays an annual dividend of $2.75 per share and has a dividend yield of 6.0%. Star Group pays out 42.2% of its earnings in the form of a dividend. Enbridge pays out 147.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Star Group has increased its dividend for 13 consecutive years and Enbridge has increased its dividend for 2 consecutive years. Star Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Star Group and Enbridge’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Star Group	4.57%	24.43%	8.39%
Enbridge	7.20%	11.17%	3.02%

Risk & Volatility

Star Group has a beta of 0.31, suggesting that its share price is 69% less volatile than the S&P 500. Comparatively, Enbridge has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500.

Summary

Enbridge beats Star Group on 11 of the 17 factors compared between the two stocks.

About Star Group

Star Group, L.P., together with its subsidiaries, provides home heating oil and propane products and services to residential and commercial customers in the United States. It offers gasoline and diesel fuel; and installs, maintain, and repairs heating and air conditioning equipment. As of September 30, 2023, the company served approximately 402,200 full service residential and commercial home heating oil and propane customers and 52,400 customers on a delivery only basis. It also sells gasoline and diesel fuel to approximately 26,600 customers. The company was formerly known as Star Gas Partners, L.P. and changed its name to Star Group, L.P. in October 2017. Star Group, L.P. was incorporated in 1995 and is based in Stamford, Connecticut.

About Enbridge

Enbridge Inc., together with its subsidiaries, operates as an energy infrastructure company. The company operates through five segments: Liquids Pipelines, Gas Transmission and Midstream, Gas Distribution and Storage, Renewable Power Generation, and Energy Services. The Liquids Pipelines segment operates pipelines and related terminals to transport various grades of crude oil and other liquid hydrocarbons in Canada and the United States. The Gas Transmission and Midstream segment invests in natural gas pipelines and gathering and processing facilities in Canada and the United States. The Gas Distribution and Storage segment is involved in natural gas utility operations serving residential, commercial, and industrial customers in Ontario, as well as natural gas distribution activities in Quebec. The Renewable Power Generation segment operates power generating assets, such as wind, solar, geothermal, waste heat recovery, and transmission assets in North America. The Energy Services segment provides physical commodity marketing and logistical services to refiners, producers, and other customers in Canada and the United States. The company was formerly known as IPL Energy Inc. and changed its name to Enbridge Inc. in October 1998. Enbridge Inc. was founded in 1949 and is headquartered in Calgary, Canada.