Critical Contrast: Markwest Energy Partners (MWE) & Phillips 66 (PSX)

Phillips 66 (NYSE: PSX) and Markwest Energy Partners (NYSE:MWE) are both mid-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, risk, profitabiliy, analyst recommendations and earnings.

Dividends

Phillips 66 pays an annual dividend of $2.80 per share and has a dividend yield of 3.5%. Markwest Energy Partners does not pay a dividend. Phillips 66 pays out 87.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Phillips 66 has raised its dividend for 6 consecutive years and Markwest Energy Partners has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a summary of recent ratings and target prices for Phillips 66 and Markwest Energy Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Phillips 66 0 10 4 0 2.29
Markwest Energy Partners 0 0 0 0 N/A

Phillips 66 presently has a consensus price target of $84.50, suggesting a potential upside of 4.40%. Given Phillips 66’s higher possible upside, research analysts plainly believe Phillips 66 is more favorable than Markwest Energy Partners.

Valuation and Earnings

This table compares Phillips 66 and Markwest Energy Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Phillips 66 $76.71 billion 0.54 $2.05 billion $3.22 25.14
Markwest Energy Partners N/A N/A N/A N/A N/A

Phillips 66 has higher revenue and earnings than Markwest Energy Partners.

Insider & Institutional Ownership

70.0% of Phillips 66 shares are held by institutional investors. 0.5% of Phillips 66 shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Phillips 66 and Markwest Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Phillips 66 1.86% 5.98% 2.81%
Markwest Energy Partners 10.37% 2.42% 1.71%

Summary

Phillips 66 beats Markwest Energy Partners on 9 of the 11 factors compared between the two stocks.

Phillips 66 Company Profile

Phillips 66 is an energy manufacturing and logistics company with midstream, chemicals, refining, and marketing and specialties businesses. The Company operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment gathers, processes, transports and markets natural gas, and transports, stores, fractionates and markets natural gas liquids (NGLs) in the United States. The Chemicals segment consists of its equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics. The Refining segment buys, sells and refines crude oil and other feedstocks at refineries in the United States and Europe. The M&S segment purchases for resale and markets refined petroleum products, such as gasolines, distillates and aviation fuels, primarily in the United States and Europe, as well as includes the manufacturing and marketing of specialty products, and power generation operations.

Markwest Energy Partners Company Profile

MarkWest Energy Partners, L.P. (MarkWest) is a master limited partnership engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of natural gas liquids (NGLs), and the gathering and transportation of crude oil. The Company operates in four segments: Marcellus, Utica, Northeast and Southwest. The Marcellus segment provides integrated natural gas midstream services in southwestern Pennsylvania and northern West Virginia. The Company’s MarkWest Utica EMG provides gathering, processing, fractionation and marketing services. The Northeast segment assets include the Kenova, Boldman, Cobb, Kermit and Langley natural gas processing complexes, an NGL pipeline and the Siloam fractionation facility. The Company owns a system that consists of natural gas gathering pipelines, centralized compressor stations, two natural gas processing complexes and two NGL pipelines.

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