Midcoast Energy Partners (NYSE: MEP) and China Petroleum & Chemical (NYSE:SNP) are both energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.

Earnings and Valuation

This table compares Midcoast Energy Partners and China Petroleum & Chemical’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Midcoast Energy Partners N/A N/A N/A ($3.67) -2.17
China Petroleum & Chemical $290.79 billion 0.35 $7.02 billion $6.69 12.57

China Petroleum & Chemical has higher revenue and earnings than Midcoast Energy Partners. Midcoast Energy Partners is trading at a lower price-to-earnings ratio than China Petroleum & Chemical, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Midcoast Energy Partners and China Petroleum & Chemical’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Midcoast Energy Partners -5.25% -34.51% -2.64%
China Petroleum & Chemical N/A 4.48% 2.54%

Institutional and Insider Ownership

64.7% of Midcoast Energy Partners shares are owned by institutional investors. Comparatively, 0.9% of China Petroleum & Chemical shares are owned by institutional investors. 92.2% of China Petroleum & Chemical shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Midcoast Energy Partners pays an annual dividend of $1.43 per share and has a dividend yield of 18.0%. China Petroleum & Chemical pays an annual dividend of $3.55 per share and has a dividend yield of 4.2%. Midcoast Energy Partners pays out -39.0% of its earnings in the form of a dividend. China Petroleum & Chemical pays out 53.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Midcoast Energy Partners has increased its dividend for 3 consecutive years. Midcoast Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations for Midcoast Energy Partners and China Petroleum & Chemical, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Midcoast Energy Partners 0 1 0 0 2.00
China Petroleum & Chemical 0 3 3 0 2.50

Midcoast Energy Partners presently has a consensus price target of $8.00, indicating a potential upside of 0.63%. Given Midcoast Energy Partners’ higher probable upside, equities analysts clearly believe Midcoast Energy Partners is more favorable than China Petroleum & Chemical.

Risk and Volatility

Midcoast Energy Partners has a beta of 2.45, meaning that its stock price is 145% more volatile than the S&P 500. Comparatively, China Petroleum & Chemical has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500.

Summary

China Petroleum & Chemical beats Midcoast Energy Partners on 9 of the 15 factors compared between the two stocks.

About Midcoast Energy Partners

Midcoast Energy Partners, L.P. (MEP) is a limited partnership company that is engaged in the natural gas and natural gas liquids (NGL) midstream business. It operates through two segments: Gathering, Processing and Transportation, and Logistics and Marketing. It also provides marketing services of natural gas and NGLs to wholesale customers. The Company’s gathering, processing and transportation business includes natural gas and NGL gathering and transportation pipeline systems, natural gas processing and treating facilities, condensate stabilizers and an NGL fractionation facility. Its logistics and marketing business provides marketing services of natural gas, NGLs and condensate received from its gathering, processing and transportation business. The Company holds interest in Midcoast Operating, L.P., a Texas limited partnership that owns a network of natural gas and NGL gathering and transportation systems, natural gas processing and treating facilities.

About China Petroleum & Chemical

China Petroleum & Chemical Corporation is a China-based energy and chemical company. The Company’s segments include Exploration and Development segment, Refining segment, Marketing and Distribution segment, Chemicals segment, and Corporate and Others segment. Exploration and Development segment explores and develops oil fields, as well as produces crude oil and natural gas. Refining segment processes and purifies crude oil, which is sourced from Exploration and Development segment and external suppliers. Marketing and Distribution segment owns and operates oil depots and service stations in China. Chemical segment manufactures and sells petrochemical products, derivative petrochemical products and other chemical products to external customers.

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