Critical Review: California Resources (NYSE:CRC) versus Pembina Pipeline (NYSE:PBA)

Pembina Pipeline (NYSE:PBA) and California Resources (NYSE:CRC) are both energy companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, analyst recommendations, profitability, risk and earnings.

Dividends

Pembina Pipeline pays an annual dividend of $2.12 per share and has a dividend yield of 4.1%. California Resources pays an annual dividend of $1.62 per share and has a dividend yield of 2.9%. Pembina Pipeline pays out 103.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. California Resources pays out -119.1% of its earnings in the form of a dividend. Pembina Pipeline has raised its dividend for 4 consecutive years and California Resources has raised its dividend for 1 consecutive years. Pembina Pipeline is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

55.4% of Pembina Pipeline shares are owned by institutional investors. Comparatively, 97.8% of California Resources shares are owned by institutional investors. 0.1% of Pembina Pipeline shares are owned by insiders. Comparatively, 0.5% of California Resources shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Pembina Pipeline and California Resources”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pembina Pipeline	$5.57 billion	5.37	$1.21 billion	$2.04	25.18
California Resources	$3.73 billion	1.32	$363.00 million	($1.36)	-40.85

Pembina Pipeline has higher revenue and earnings than California Resources. California Resources 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 California Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pembina Pipeline	22.41%	11.41%	4.82%
California Resources	-3.79%	9.82%	4.65%

Risk & Volatility

Pembina Pipeline has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, California Resources has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Pembina Pipeline and California Resources, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pembina Pipeline	0	5	5	0	2.50
California Resources	0	3	9	1	2.85

Pembina Pipeline presently has a consensus target price of $64.00, suggesting a potential upside of 24.59%. California Resources has a consensus target price of $74.44, suggesting a potential upside of 34.01%. Given California Resources’ stronger consensus rating and higher possible upside, analysts clearly believe California Resources is more favorable than Pembina Pipeline.

Summary

Pembina Pipeline beats California Resources on 10 of the 18 factors compared between the two stocks.

About Pembina Pipeline

Pembina Pipeline Corporation provides energy transportation and midstream services. It operates through three segments: Pipelines, Facilities, and Marketing & New Ventures. The Pipelines segment operates conventional, oil sands and heavy oil, and transmission assets with a transportation capacity of 2.9 millions of barrels of oil equivalent per day, the ground storage capacity of 10 millions of barrels, and rail terminalling capacity of approximately 105 thousands of barrels of oil equivalent per day serving markets and basins across North America. The Facilities segment offers infrastructure that provides customers with natural gas, condensate, and natural gas liquids (NGLs), including ethane, propane, butane, and condensate; and includes 354 thousands of barrels per day of NGL fractionation capacity, 21 millions of barrels of cavern storage capacity, and associated pipeline, and rail terminalling facilities and a liquefied propane export facility. The Marketing & New Ventures segment buys and sells hydrocarbon liquids and natural gas originating in the Western Canadian sedimentary basin and other basins. Pembina Pipeline Corporation was incorporated in 1954 and is headquartered in Calgary, Canada.

About California Resources

California Resources Corporation operates as an independent oil and natural gas exploration and production, and carbon management company in the United States. The company explores, produces, and markets crude oil, natural gas, and natural gas liquids for marketers, California refineries, and other purchasers that have access to transportation and storage facilities. It also engages in the generation and sale of electricity to the wholesale power market and utility sector; and developing various carbon capture and storage projects in California. The company was incorporated in 2014 and is based in Long Beach, California.