Critical Survey: Delek Logistics Partners (DKL) and BP Midstream Partners (BPMP)

BP Midstream Partners (NYSE: BPMP) and Delek Logistics Partners (NYSE:DKL) are both small-cap oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, earnings, risk, valuation and institutional ownership.

Insider and Institutional Ownership

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49.7% of BP Midstream Partners shares are held by institutional investors. Comparatively, 24.6% of Delek Logistics Partners shares are held by institutional investors. 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.

Dividends

BP Midstream Partners pays an annual dividend of $0.72 per share and has a dividend yield of 4.0%. Delek Logistics Partners pays an annual dividend of $2.90 per share and has a dividend yield of 10.2%. Delek Logistics Partners pays out 138.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Delek Logistics Partners has raised its dividend for 4 consecutive years. Delek Logistics Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares BP Midstream Partners and Delek Logistics Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BP Midstream Partners N/A N/A N/A
Delek Logistics Partners 12.90% -292.19% 16.38%

Earnings and Valuation

This table compares BP Midstream Partners and Delek Logistics Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BP Midstream Partners $108.15 million 17.28 $60.87 million N/A N/A
Delek Logistics Partners $538.08 million 1.31 $69.40 million $2.09 13.56

Delek Logistics Partners has higher revenue and earnings than BP Midstream Partners.

Analyst Recommendations

This is a summary of recent recommendations for BP Midstream Partners and Delek Logistics Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BP Midstream Partners 0 6 2 0 2.25
Delek Logistics Partners 1 2 0 0 1.67

BP Midstream Partners currently has a consensus price target of $20.43, suggesting a potential upside of 14.51%. Delek Logistics Partners has a consensus price target of $32.50, suggesting a potential upside of 14.64%. Given Delek Logistics Partners’ higher probable upside, analysts plainly believe Delek Logistics Partners is more favorable than BP Midstream Partners.

Summary

Delek Logistics Partners beats BP Midstream Partners on 7 of the 13 factors compared between the two stocks.

About BP Midstream Partners

BP Midstream Partners LP is a master limited partnership formed by BP Pipelines (North America) Inc. The Company owns, operates, develops and acquires pipelines and other midstream assets. It owns one onshore crude oil pipeline system, one onshore refined products pipeline system, one onshore diluent pipeline system, interests in four offshore crude oil pipeline systems and an interest in one offshore natural gas pipeline system. Its onshore crude oil, refined products and diluent pipelines include BP2 Pipeline, River Rouge Pipeline and Diamondback Pipeline. Its offshore crude oil and natural gas pipelines include Mars System, Caesar Pipeline, Cleopatra Pipeline, Proteus Pipeline and Endymion Pipeline.

About Delek Logistics Partners

Delek Logistics Partners, LP owns and operates logistics and marketing assets for crude oil, and intermediate and refined products. The Company’s business primarily consists of certain crude oil, intermediate and refined products pipelines and transportation, storage, wholesale marketing, terminaling and offloading assets, which were previously owned, operated or held by Delek US Holdings, Inc. (Delek), and assets acquired from unrelated third parties. The Company operates through two segments: Pipelines and Transportation segment, and Wholesale Marketing and Terminalling segment. The Company engaged in the gathering, transporting and storing crude oil; storing intermediate products and feed stocks, and marketing, distributing, transporting, offloading and storing refined products. The Company also provides crude oil, intermediate and refined products transportation services for terminaling, and marketing services to third parties primarily in Texas, Tennessee and Arkansas.

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