Marathon Petroleum (NYSE: MPC) and Western Gas Partners (NYSE:WES) are both energy companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.
Institutional & Insider Ownership
80.4% of Marathon Petroleum shares are owned by institutional investors. Comparatively, 59.0% of Western Gas Partners shares are owned by institutional investors. 1.1% of Marathon Petroleum shares are owned by insiders. Comparatively, 0.0% of Western Gas Partners shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
This table compares Marathon Petroleum and Western Gas Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Western Gas Partners||25.24%||14.38%||7.25%|
Marathon Petroleum pays an annual dividend of $1.84 per share and has a dividend yield of 2.7%. Western Gas Partners pays an annual dividend of $3.68 per share and has a dividend yield of 7.9%. Marathon Petroleum pays out 48.3% of its earnings in the form of a dividend. Western Gas Partners pays out 289.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Marathon Petroleum has increased its dividend for 7 consecutive years and Western Gas Partners has increased its dividend for 10 consecutive years. Western Gas Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings & Valuation
This table compares Marathon Petroleum and Western Gas Partners’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Marathon Petroleum||$75.37 billion||0.44||$3.43 billion||$3.81||18.20|
|Western Gas Partners||$2.25 billion||3.15||$567.48 million||$1.27||36.51|
Marathon Petroleum has higher revenue and earnings than Western Gas Partners. Marathon Petroleum is trading at a lower price-to-earnings ratio than Western Gas Partners, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations for Marathon Petroleum and Western Gas Partners, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Western Gas Partners||0||6||6||0||2.50|
Marathon Petroleum presently has a consensus target price of $80.18, indicating a potential upside of 15.60%. Western Gas Partners has a consensus target price of $57.91, indicating a potential upside of 24.88%. Given Western Gas Partners’ higher probable upside, analysts clearly believe Western Gas Partners is more favorable than Marathon Petroleum.
Volatility & Risk
Marathon Petroleum has a beta of 1.51, indicating that its share price is 51% more volatile than the S&P 500. Comparatively, Western Gas Partners has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500.
Marathon Petroleum beats Western Gas Partners on 9 of the 17 factors compared between the two stocks.
About Marathon Petroleum
Marathon Petroleum Corporation is engaged in refining, marketing, retail and transportation businesses in the United States and the largest east of the Mississippi. The Company operates through three segments: Refining & Marketing; Speedway; and Midstream. The Refining & Marketing segment refines crude oil and other feedstocks at the Company’s seven refineries in the Gulf Coast and Midwest regions of the United States. Its Speedway segment sells transportation fuels and convenience products in the retail market in the Midwest, East Coast and Southeast regions of the United States. The Company’s Midstream is engaged in the operations of MPLX LP and certain other related operations. It gathers, processes and transports natural gas, natural gas liquids (NGLs), crude oil and refined products. MPLX is a limited partnership which owns, operates, develops and acquires midstream energy infrastructure assets.
About Western Gas Partners
Western Gas Partners, LP is a master limited partnership (MLP) that acquires, owns, develops and operates midstream energy assets. The Company is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids (NGLs) and crude oil in the United States. The Company provides midstream services for Anadarko Petroleum Corporation (Anadarko), as well as for third-party producers and customers. The Company’s operations and activities are managed by its general partner, which is indirectly controlled by Anadarko through Western Gas Equity Partners, LP (WGP). As of December 31, 2016, its assets and investments consisted of gathering systems, treating facilities, natural gas processing plants/trains, NGL pipelines, natural gas pipelines and oil pipelines. These assets and investments are located in the Rocky Mountains (Colorado, Utah and Wyoming), North-central Pennsylvania and Texas.
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