Reviewing Kinder Morgan (KMI) and Western Gas Partners (WES)
Kinder Morgan (NYSE:KMI) and Western Gas Partners (NYSE:WES) are both oils/energy companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, institutional ownership, earnings, risk and profitability.
Insider & Institutional Ownership
63.9% of Kinder Morgan shares are held by institutional investors. Comparatively, 61.2% of Western Gas Partners shares are held by institutional investors. 14.2% of Kinder Morgan shares are held by company 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.
Kinder Morgan has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Western Gas Partners has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500.
This is a breakdown of current ratings and recommmendations for Kinder Morgan and Western Gas Partners, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Western Gas Partners||0||7||3||0||2.30|
Kinder Morgan currently has a consensus target price of $20.78, indicating a potential upside of 4.59%. Western Gas Partners has a consensus target price of $49.50, indicating a potential upside of 56.00%. Given Western Gas Partners’ higher probable upside, analysts clearly believe Western Gas Partners is more favorable than Kinder Morgan.
This table compares Kinder Morgan and Western Gas Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Western Gas Partners||19.06%||11.72%||4.80%|
Valuation & Earnings
This table compares Kinder Morgan and Western Gas Partners’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Kinder Morgan||$14.14 billion||3.10||$1.61 billion||$0.89||22.33|
|Western Gas Partners||$1.99 billion||3.49||$369.42 million||$2.51||12.64|
Kinder Morgan has higher revenue and earnings than Western Gas Partners. Western Gas Partners is trading at a lower price-to-earnings ratio than Kinder Morgan, indicating that it is currently the more affordable of the two stocks.
Kinder Morgan pays an annual dividend of $0.80 per share and has a dividend yield of 4.0%. Western Gas Partners pays an annual dividend of $2.41 per share and has a dividend yield of 7.6%. Kinder Morgan pays out 89.9% 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 pays out 96.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Gas Partners has increased 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.
Kinder Morgan Company Profile
Kinder Morgan, Inc. operates as an energy infrastructure company 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 and crude oil gathering systems, and natural gas processing and treating facilities; natural gas liquids (NGL) fractionation facilities and transportation systems; and liquefied natural gas facilities. The Products Pipelines segment owns and operates refined petroleum products, NGL, 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 transload and store refined petroleum products, crude oil, ethanol, and chemicals, as well as bulk products, including coke, metals, and ores; and owns tankers. The CO2 segment produces, transports, and markets CO2 to recovery and production crude oil from mature oil fields; and owns interests in/or operates oil fields and gas processing plants, as well as operates a crude oil pipeline system in West Texas. The company owns an interest in or operates approximately 84,000 miles of pipelines and 153 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 founded in 1936 and is headquartered in Houston, Texas.
Western Gas Partners Company Profile
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.
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