Reviewing Magnolia Oil & Gas (NYSE:MGY) & Kinder Morgan (NYSE:KMI)

Kinder Morgan (NYSE:KMI) and Magnolia Oil & Gas (NYSE:MGY) are both energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

This is a summary of recent ratings and price targets for Kinder Morgan and Magnolia Oil & Gas, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kinder Morgan	0	10	7	0	2.41
Magnolia Oil & Gas	0	6	10	2	2.78

Kinder Morgan presently has a consensus price target of $35.45, indicating a potential upside of 11.46%. Magnolia Oil & Gas has a consensus price target of $31.71, indicating a potential upside of 26.25%. Given Magnolia Oil & Gas’ stronger consensus rating and higher possible upside, analysts clearly believe Magnolia Oil & Gas is more favorable than Kinder Morgan.

Risk & Volatility

Kinder Morgan has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Magnolia Oil & Gas has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500.

Profitability

This table compares Kinder Morgan and Magnolia Oil & Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kinder Morgan	19.31%	10.46%	4.65%
Magnolia Oil & Gas	28.77%	21.04%	14.46%

Earnings & Valuation

This table compares Kinder Morgan and Magnolia Oil & Gas”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kinder Morgan	$16.94 billion	4.18	$3.06 billion	$1.56	20.39
Magnolia Oil & Gas	$1.31 billion	4.54	$325.25 million	$2.28	11.02

Kinder Morgan has higher revenue and earnings than Magnolia Oil & Gas. Magnolia Oil & Gas is trading at a lower price-to-earnings ratio than Kinder Morgan, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

62.5% of Kinder Morgan shares are owned by institutional investors. Comparatively, 94.7% of Magnolia Oil & Gas shares are owned by institutional investors. 12.7% of Kinder Morgan shares are owned by insiders. Comparatively, 0.9% of Magnolia Oil & Gas shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Kinder Morgan pays an annual dividend of $1.19 per share and has a dividend yield of 3.7%. Magnolia Oil & Gas pays an annual dividend of $0.72 per share and has a dividend yield of 2.9%. Kinder Morgan pays out 76.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Magnolia Oil & Gas pays out 31.6% of its earnings in the form of a dividend. Kinder Morgan has increased its dividend for 9 consecutive years and Magnolia Oil & Gas has increased its dividend for 3 consecutive years. Kinder Morgan is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Magnolia Oil & Gas beats Kinder Morgan on 12 of the 18 factors compared between the two stocks.

About Kinder Morgan

Kinder Morgan, Inc. operates as an energy infrastructure company primarily in North America. The company operates through Natural Gas Pipelines, Products Pipelines, Terminals, and CO2 segments. The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipeline, and storage systems; natural gas gathering systems and natural gas processing and treating facilities; natural gas liquids fractionation facilities and transportation systems; and liquefied natural gas gasification, liquefaction, and storage facilities. The Products Pipelines segment owns and operates refined petroleum products, and crude oil and condensate pipelines; and associated product terminals and petroleum pipeline transmix facilities. The Terminals segment owns and/or operates liquids and bulk terminals that stores and handles various commodities, including gasoline, diesel fuel, renewable fuel and feedstocks, chemicals, ethanol, metals, and petroleum coke; and owns tankers. The CO2 segment produces, transports, and markets CO2 to recovery and production crude oil from mature oil fields; owns interests in/or operates oil fields and gasoline processing plants; and operates a crude oil pipeline system in West Texas, as well as owns and operates RNG and LNG facilities. It owns and operates approximately 82,000 miles of pipelines and 139 terminals. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan, Inc. in February 2011. Kinder Morgan, Inc. was incorporated in 2006 and is headquartered in Houston, Texas.

About Magnolia Oil & Gas

Magnolia Oil & Gas Corp. engages in the acquisition, development, exploration, and production of oil and natural gas properties. It operates assets located in the Eagle Ford Shale and Austin Chalk formations in South Texas. The company was founded on February 14, 2017 and is headquartered in Houston, TX.