Kinder Morgan (NYSE:KMI) and Archrock (NYSE:AROC) are both oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, dividends and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for Kinder Morgan and Archrock, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kinder Morgan 0 2 16 1 2.95
Archrock 0 2 5 0 2.71

Kinder Morgan presently has a consensus price target of $20.94, indicating a potential upside of 19.59%. Archrock has a consensus price target of $14.63, indicating a potential upside of 28.06%. Given Archrock’s higher possible upside, analysts clearly believe Archrock is more favorable than Kinder Morgan.

Risk and Volatility

Kinder Morgan has a beta of 0.73, indicating that its share price is 27% less volatile than the S&P 500. Comparatively, Archrock has a beta of 2.86, indicating that its share price is 186% more volatile than the S&P 500.

Institutional & Insider Ownership

60.3% of Kinder Morgan shares are held by institutional investors. Comparatively, 88.9% of Archrock shares are held by institutional investors. 14.2% of Kinder Morgan shares are held by insiders. Comparatively, 2.5% of Archrock shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Kinder Morgan pays an annual dividend of $0.80 per share and has a dividend yield of 4.6%. Archrock pays an annual dividend of $0.53 per share and has a dividend yield of 4.6%. Kinder Morgan pays out 121.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Archrock pays out -265.0% of its earnings in the form of a dividend. Archrock is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Kinder Morgan and Archrock’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kinder Morgan $13.71 billion 2.82 $183.00 million $0.66 26.53
Archrock $794.66 million 1.86 $18.95 million ($0.20) -57.10

Kinder Morgan has higher revenue and earnings than Archrock. Archrock is trading at a lower price-to-earnings ratio than Kinder Morgan, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Kinder Morgan and Archrock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kinder Morgan -1.82% 5.07% 2.26%
Archrock 4.19% 0.45% 0.14%

Summary

Kinder Morgan beats Archrock on 11 of the 17 factors compared between the two stocks.

Kinder Morgan Company Profile

Kinder Morgan, Inc. operates as an energy infrastructure company in North America. It operates through Natural Gas Pipelines, CO2, Terminals, Products Pipelines, and Kinder Morgan Canada 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 CO2 segment produces, transports, and markets CO2 for recovering 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 Terminals segment owns and operates liquids and bulk terminals that transload and store refined petroleum products, crude oil, chemicals, and ethanol, as well as bulk products, including coke, steel, and coal; and owns tankers. 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 Kinder Morgan Canada segment owns and operates Trans Mountain pipeline system that transports crude oil and refined petroleum products from Edmonton, Alberta, and Canada to marketing terminals and refineries in British Columbia, Canada, and the state of Washington; and Jet Fuel aviation turbine fuel pipeline that serves the Vancouver (Canada) International Airport. As of February 5, 2018, Kinder Morgan, Inc. owns or operates approximately 85,000 miles of pipelines and 152 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.

Archrock Company Profile

Archrock, Inc. engages in the natural gas contract operations services business in the United States. The company provides natural gas compression services to customers in the oil and natural gas industry. It also offers aftermarket services, such as parts and components; and operation, maintenance, overhaul, and reconfiguration services to customers who own compression equipment. The company was formerly known as Exterran Holdings, Inc. and changed its name to Archrock, Inc. in November 2015. Archrock, Inc. was founded in 1990 and is headquartered in Houston, Texas.

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