Western Gas Partners (WES) and Williams Companies (WMB) Head to Head Analysis

Western Gas Partners (NYSE:WES) and Williams Companies (NYSE:WMB) are both oils/energy companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, institutional ownership, analyst recommendations, risk, valuation, dividends and profitability.

Institutional and Insider Ownership

60.8% of Western Gas Partners shares are owned by institutional investors. Comparatively, 91.2% of Williams Companies shares are owned by institutional investors. 0.0% of Western Gas Partners shares are owned by insiders. Comparatively, 0.5% of Williams Companies shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Western Gas Partners has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500. Comparatively, Williams Companies has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500.

Profitability

This table compares Western Gas Partners and Williams Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Western Gas Partners 24.11% 12.78% 5.62%
Williams Companies 24.15% 4.44% 1.53%

Earnings & Valuation

This table compares Western Gas Partners and Williams Companies’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Western Gas Partners $2.25 billion 3.19 $567.48 million $1.30 36.15
Williams Companies $8.03 billion 3.77 $2.17 billion $0.63 39.75

Williams Companies has higher revenue and earnings than Western Gas Partners. Western Gas Partners is trading at a lower price-to-earnings ratio than Williams Companies, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Western Gas Partners and Williams Companies, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Gas Partners 0 7 6 0 2.46
Williams Companies 0 3 14 0 2.82

Western Gas Partners presently has a consensus price target of $52.23, suggesting a potential upside of 11.13%. Williams Companies has a consensus price target of $33.00, suggesting a potential upside of 31.79%. Given Williams Companies’ stronger consensus rating and higher possible upside, analysts clearly believe Williams Companies is more favorable than Western Gas Partners.

Dividends

Western Gas Partners pays an annual dividend of $3.86 per share and has a dividend yield of 8.2%. Williams Companies pays an annual dividend of $1.36 per share and has a dividend yield of 5.4%. Western Gas Partners pays out 296.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Williams Companies pays out 215.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Gas Partners has raised its dividend for 11 consecutive years. Western Gas Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Williams Companies beats Western Gas Partners on 12 of the 17 factors compared between the two stocks.

About Western Gas Partners

Western Gas Partners, LP acquires, develops, owns, and operates midstream energy assets in the Rocky Mountains, North-central Pennsylvania, and Texas. It is involved in gathering, processing, compressing, treating, and transporting natural gas, condensate, natural gas liquids, and crude oil. Western Gas Holdings, LLC serves as the general partner of Western Gas Partners, LP. The company was founded in 2007 and is headquartered in The Woodlands, Texas.

About Williams Companies

The Williams Companies, Inc. operates as an energy infrastructure company primarily in the United States. It owns and operates natural gas pipeline system extending from Texas, Louisiana, Mississippi, and the Gulf of Mexico through Alabama, Georgia, South Carolina, North Carolina, Virginia, Maryland, Delaware, Pennsylvania, and New Jersey to the New York City metropolitan area. The company also owns and operates a natural gas pipeline system extending from the San Juan basin in northwestern New Mexico and southwestern Colorado through Colorado, Utah, Wyoming, Idaho, Oregon, and Washington to a point on the Canadian border near Sumas, Washington; gulfstream natural gas pipeline system extending from the Mobile Bay area in Alabama to markets in Florida; and constitution pipeline that would connect its gathering system in Susquehanna County, Pennsylvania to the Iroquois Gas Transmission and Tennessee Gas Pipeline systems in New York. In addition, it provides natural gas gathering, treating, processing, and compression services; natural gas liquids production, fractionation, storage, marketing, and transportation services; and deepwater production handling and crude oil transportation services. The company transports and stores natural gas to local natural gas distribution companies, municipal utilities, direct industrial users, electric power generators, and natural gas marketers and producers. As of December 31, 2017, it owned and operated approximately 13,600 miles of pipelines. The Williams Companies, Inc. was founded in 1908 and is headquartered in Tulsa, Oklahoma.

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