Targa Resources (NYSE:TRGP) and Antero Midstream GP (NYSE:AMGP) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.
Volatility & Risk
Targa Resources has a beta of 1.95, indicating that its share price is 95% more volatile than the S&P 500. Comparatively, Antero Midstream GP has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500.
This is a breakdown of current recommendations for Targa Resources and Antero Midstream GP, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Antero Midstream GP||0||4||6||0||2.60|
Targa Resources currently has a consensus target price of $58.28, suggesting a potential upside of 15.29%. Antero Midstream GP has a consensus target price of $21.80, suggesting a potential upside of 43.70%. Given Antero Midstream GP’s higher possible upside, analysts plainly believe Antero Midstream GP is more favorable than Targa Resources.
Targa Resources pays an annual dividend of $3.64 per share and has a dividend yield of 7.2%. Antero Midstream GP pays an annual dividend of $0.58 per share and has a dividend yield of 3.8%. Targa Resources pays out -846.5% of its earnings in the form of a dividend. Antero Midstream GP pays out 1,933.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Targa Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Targa Resources and Antero Midstream GP’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Targa Resources||$8.81 billion||1.29||$54.00 million||($0.43)||-117.56|
|Antero Midstream GP||$69.72 million||40.52||$2.32 million||$0.03||505.67|
Targa Resources has higher revenue and earnings than Antero Midstream GP. Targa Resources is trading at a lower price-to-earnings ratio than Antero Midstream GP, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
92.0% of Targa Resources shares are owned by institutional investors. Comparatively, 76.8% of Antero Midstream GP shares are owned by institutional investors. 1.8% of Targa Resources shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This table compares Targa Resources and Antero Midstream GP’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Antero Midstream GP||40.12%||231.93%||127.97%|
Targa Resources beats Antero Midstream GP on 10 of the 17 factors compared between the two stocks.
About Targa Resources
Targa Resources Corp., together with its subsidiary, Targa Resources Partners LP, owns, operates, acquires, and develops a portfolio of midstream energy assets in North America. It operates in two segments, Gathering and Processing, and Logistics and Marketing. The company engages in gathering, compressing, treating, processing, and selling natural gas; storing, fractionating, treating, transporting, and selling natural gas liquids (NGL) and NGL products, including services to liquefied petroleum gas exporters; gathering, storing, terminaling, and selling crude oil; and storing, terminaling, and selling refined petroleum products. It is also involved in the purchase and resale of NGL products; and wholesale of propane, as well as provision of related logistics services to multi-state retailers, independent retailers, and other end-users. In addition, the company offers NGL balancing services; and transportation services to refineries and petrochemical companies in the Gulf Coast area, as well as purchases, markets, and resells natural gas. The company operates approximately 27,000 miles of natural gas pipelines, including 37 owned and operated processing plants; and owns or operates a total of 39 storage wells with a gross storage capacity of approximately 69 million barrels. As of December 31, 2017, it leased and managed approximately 640 railcars; 130 transport tractors; and 18 company-owned pressurized NGL barges. The company was founded in 2005 and is headquartered in Houston, Texas.
About Antero Midstream GP
Antero Midstream GP LP owns, operates, and develops midstream energy assets in the Marcellus and Utica Shales in West Virginia and Ohio. Its assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants, and water handling and treatment assets, which provide midstream services to Antero Resources Corporation under long term fixed fee contracts. The company was formerly known as Antero Resources Midstream Management LLC and changed its name to Antero Midstream GP LP in May 2017. Antero Midstream GP LP was founded in 2013 and is based in Denver, Colorado.
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