Financial Contrast: Energy Transfer LP Unit (NYSE:ET) and Western Midstream Partners (NYSE:WES)

Energy Transfer LP Unit (NYSE:ET) and Western Midstream Partners (NYSE:WES) are both large-cap oils/energy companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Valuation and Earnings

This table compares Energy Transfer LP Unit and Western Midstream Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Energy Transfer LP Unit $54.09 billion 0.62 $1.66 billion $1.15 11.04
Western Midstream Partners $1.99 billion 5.18 $369.43 million $2.51 9.07

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

Dividends

Energy Transfer LP Unit pays an annual dividend of $1.22 per share and has a dividend yield of 9.6%. Western Midstream Partners pays an annual dividend of $2.47 per share and has a dividend yield of 10.9%. Energy Transfer LP Unit pays out 106.1% 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 Midstream Partners pays out 98.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Midstream Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Energy Transfer LP Unit and Western Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Energy Transfer LP Unit 4.99% 9.10% 3.19%
Western Midstream Partners 18.98% 14.63% 4.94%

Risk & Volatility

Energy Transfer LP Unit has a beta of 1.52, meaning that its stock price is 52% more volatile than the S&P 500. Comparatively, Western Midstream Partners has a beta of 1.45, meaning that its stock price is 45% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Energy Transfer LP Unit and Western Midstream Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Energy Transfer LP Unit 0 1 8 0 2.89
Western Midstream Partners 0 11 3 0 2.21

Energy Transfer LP Unit presently has a consensus price target of $20.11, suggesting a potential upside of 58.36%. Western Midstream Partners has a consensus price target of $32.50, suggesting a potential upside of 42.79%. Given Energy Transfer LP Unit’s stronger consensus rating and higher probable upside, equities analysts plainly believe Energy Transfer LP Unit is more favorable than Western Midstream Partners.

Insider and Institutional Ownership

55.3% of Energy Transfer LP Unit shares are owned by institutional investors. Comparatively, 41.0% of Western Midstream Partners shares are owned by institutional investors. 3.3% of Energy Transfer LP Unit shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Energy Transfer LP Unit beats Western Midstream Partners on 9 of the 16 factors compared between the two stocks.

Energy Transfer LP Unit Company Profile

Energy Transfer LP provides energy-related services in the United States and China. The company owns and operates approximately 9,400 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas; and approximately 12,200 miles of interstate natural gas pipelines. It sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. The company owns and operates natural gas gathering and natural gas liquid (NGL) pipelines, processing plants, treating facilities, and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, Ohio, 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. It also owns approximately 4,769 miles of NGL pipelines; NGL and propane fractionation facilities; NGL storage facilities with working storage capacity of approximately 45 million barrels (Bbls); and other NGL storage assets and terminals with an aggregate storage capacity of approximately 11 million Bbls. The company 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. It provides natural gas compression services; 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. The company was formerly known as Energy Transfer Equity, L.P. and changed its name to Energy Transfer LP in October 2018. Energy Transfer LP was founded in 2002 and is based in Dallas, Texas.

Western Midstream Partners Company Profile

Western Midstream Partners, LP, together with its subsidiaries, engages in gathering, processing, compressing, treating, stabilizing, and transporting natural gas, condensate, natural gas liquids, and crude oil primarily in the United States. It is also involved in the gathering and disposing of produced water; and buying and selling of natural gas. The company was formerly known as Western Gas Equity Partners, LP and changed its name to Western Midstream Partners, LP in February 2019. The company was founded in 2007 and is headquartered in The Woodlands, Texas. Western Midstream Partners, LP is a subsidiary of Anadarko Petroleum Corporation.

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