Tallgrass Energy Partners (TEP) versus Energy Transfer Equity LP Unit (ETE) Financial Contrast

Tallgrass Energy Partners (NYSE: TEP) and Energy Transfer Equity LP Unit (NYSE:ETE) are both oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Analyst Ratings

This is a summary of current ratings and price targets for Tallgrass Energy Partners and Energy Transfer Equity LP Unit, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tallgrass Energy Partners 0 6 4 0 2.40
Energy Transfer Equity LP Unit 0 1 12 0 2.92

Tallgrass Energy Partners currently has a consensus target price of $45.57, suggesting a potential upside of 2.68%. Energy Transfer Equity LP Unit has a consensus target price of $20.50, suggesting a potential upside of 16.35%. Given Energy Transfer Equity LP Unit’s stronger consensus rating and higher possible upside, analysts clearly believe Energy Transfer Equity LP Unit is more favorable than Tallgrass Energy Partners.

Institutional and Insider Ownership

57.1% of Tallgrass Energy Partners shares are held by institutional investors. Comparatively, 48.2% of Energy Transfer Equity LP Unit shares are held by institutional investors. 3.3% of Energy Transfer Equity LP Unit shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Tallgrass Energy Partners has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500. Comparatively, Energy Transfer Equity LP Unit has a beta of 1.89, meaning that its share price is 89% more volatile than the S&P 500.

Earnings and Valuation

This table compares Tallgrass Energy Partners and Energy Transfer Equity LP Unit’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tallgrass Energy Partners $655.90 million 4.95 $433.99 million $3.77 11.77
Energy Transfer Equity LP Unit $40.52 billion 0.47 $915.00 million $1.21 14.56

Energy Transfer Equity LP Unit has higher revenue and earnings than Tallgrass Energy Partners. Tallgrass Energy Partners is trading at a lower price-to-earnings ratio than Energy Transfer Equity LP Unit, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Tallgrass Energy Partners and Energy Transfer Equity LP Unit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tallgrass Energy Partners 68.20% 30.04% 11.69%
Energy Transfer Equity LP Unit 2.56% 5.13% 1.67%

Dividends

Tallgrass Energy Partners pays an annual dividend of $3.90 per share and has a dividend yield of 8.8%. Energy Transfer Equity LP Unit pays an annual dividend of $1.22 per share and has a dividend yield of 6.9%. Tallgrass Energy Partners pays out 103.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Energy Transfer Equity LP Unit pays out 100.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy Partners has raised its dividend for 4 consecutive years and Energy Transfer Equity LP Unit has raised its dividend for 5 consecutive years.

Summary

Energy Transfer Equity LP Unit beats Tallgrass Energy Partners on 10 of the 17 factors compared between the two stocks.

About Tallgrass Energy Partners

Tallgrass Energy Partners, LP acquires, owns, develops, and operates midstream energy assets in North America. It operates through Natural Gas Transportation; Crude Oil Transportation; and Gathering, Processing & Terminalling segments. The Natural Gas Transportation segment engages in the ownership and operation of interstate natural gas pipelines and integrated natural gas storage facilities with approximately 4,641 miles of transportation pipelines in Wyoming, Colorado, Kansas, Missouri, and Nebraska. This segment provides its services to on-system customers, including third-party local distribution companies, industrial users, and other shippers. The Crude Oil Transportation segment engages in the ownership and operation of the Pony Express System, a crude oil pipeline serving the Bakken Shale, Denver-Julesburg, and Powder River Basins, as well as other nearby oil producing basins. The Gathering, Processing & Terminalling segment owns and operates natural gas gathering and processing facilities that produce natural gas liquids (NGLs) and residue gas for sale in local wholesale markets or delivers into pipelines for transportation to additional end markets; and crude oil gathering, storage, and terminalling facilities, as well as engages in the transportation of NGLs, and marketing of crude oil and NGLs. This segment also provides water business services primarily to the oil and gas exploration and production industry. The company was founded in 2013 and is based in Leawood, Kansas.

About Energy Transfer Equity LP Unit

Energy Transfer Equity, L.P. provides diversified energy-related services in the United States. It owns and operates approximately 7,900 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas; and approximately 11,800 miles of interstate natural gas pipelines. The company sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. Its midstream operations include ownership and operation of natural gas and natural gas liquid (NGL) gathering pipelines, natural gas processing plants, natural gas treating facilities, and natural gas conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, and Louisiana; natural gas gathering, oil pipeline, and oil stabilization facilities in South Texas; a natural gas gathering system in Ohio; and transportation and supply of water to natural gas producers in Pennsylvania. The company's NGL transportation and services operations include ownership of approximately 4,300 miles of NGL pipelines, 5 NGL and propane fractionation facilities, and NGL storage facilities with aggregate working storage capacity of approximately 53 million barrels. It also sells gasoline, middle distillates, and motor fuel at retail, as well as crude oil, NGLs, and refined products; operates convenience stores; and distributes motor fuels and other petroleum products. The company provides natural gas compression services; treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration, and British thermal unit management services; and manages coal and natural resources properties, as well as sells standing timber, leases coal-related infrastructure facilities, collects oil and gas royalties, and generates a total of 75 megawatts electrical power. Energy Transfer Equity, L.P. was founded in 2002 and is based in Dallas, Texas.

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