Analyzing Targa Pipeline Partners (APL) and Schlumberger (NYSE:SLB)

Targa Pipeline Partners (NYSE: APL) and Schlumberger (NYSE:SLB) are both oil related services and equipment – nec companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, risk, earnings, valuation, analyst recommendations, dividends and institutional ownership.

Profitability

This table compares Targa Pipeline Partners and Schlumberger’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Targa Pipeline Partners 14.09% 17.87% 9.56%
Schlumberger -4.94% 5.27% 2.81%

Dividends

Schlumberger pays an annual dividend of $2.00 per share and has a dividend yield of 3.1%. Targa Pipeline Partners does not pay a dividend. Schlumberger pays out -183.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of current recommendations and price targets for Targa Pipeline Partners and Schlumberger, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Targa Pipeline Partners 0 0 0 0 N/A
Schlumberger 0 5 24 0 2.83

Schlumberger has a consensus target price of $79.96, suggesting a potential upside of 23.43%. Given Schlumberger’s higher possible upside, analysts plainly believe Schlumberger is more favorable than Targa Pipeline Partners.

Earnings and Valuation

This table compares Targa Pipeline Partners and Schlumberger’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Targa Pipeline Partners N/A N/A N/A $0.89 30.02
Schlumberger $30.44 billion 2.95 -$1.51 billion ($1.09) -59.43

Targa Pipeline Partners has higher earnings, but lower revenue than Schlumberger. Schlumberger is trading at a lower price-to-earnings ratio than Targa Pipeline Partners, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

79.9% of Schlumberger shares are held by institutional investors. 0.5% of Schlumberger shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Schlumberger beats Targa Pipeline Partners on 7 of the 12 factors compared between the two stocks.

About Targa Pipeline Partners

Targa Pipeline Partners, L.P. (the Partnership), formerly Atlas Pipeline Partners, L.P., was formed by its parent, Targa Resources Corp., to own, operate, acquire and develop a diversified portfolio of complementary midstream energy assets. The Partnership is a provider of midstream natural gas, natural gas liquids (NGL), terminaling and crude oil gathering services in the United States. The Partnership is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling NGLs and NGL products; gathering, storing and terminaling crude oil; and storing, terminaling and selling refined petroleum products.

About Schlumberger

Schlumberger N.V. provides technology for reservoir characterization, drilling, production and processing to the oil and gas industry. The Company’s segments include Reservoir Characterization Group, Drilling Group, Production Group and Cameron Group. The Reservoir Characterization Group consists of the principal technologies involved in finding and defining hydrocarbon resources. The Drilling Group consists of the principal technologies involved in the drilling and positioning of oil and gas wells. The Production Group consists of the principal technologies involved in the lifetime production of oil and gas reservoirs and includes Well Services, Completions, Artificial Lift, Integrated Production Services (IPS) and Schlumberger Production Management (SPM). The Cameron Group consists of the principal technologies involved in pressure and flow control for drilling and intervention rigs, oil and gas wells and production facilities.

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