NGL Energy Partners (NYSE: NGL) and Alon USA Partners (NYSE:ALDW) are both small-cap energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, institutional ownership, earnings and risk.

Insider & Institutional Ownership

63.8% of NGL Energy Partners shares are owned by institutional investors. Comparatively, 5.3% of Alon USA Partners shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

NGL Energy Partners pays an annual dividend of $1.56 per share and has a dividend yield of 10.1%. Alon USA Partners pays an annual dividend of $1.40 per share and has a dividend yield of 7.7%. NGL Energy Partners pays out -74.3% of its earnings in the form of a dividend. Alon USA Partners pays out 121.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NGL Energy Partners has raised its dividend for 3 consecutive years. NGL Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for NGL Energy Partners and Alon USA Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NGL Energy Partners 0 2 3 0 2.60
Alon USA Partners 0 3 3 0 2.50

NGL Energy Partners currently has a consensus target price of $17.40, indicating a potential upside of 12.26%. Alon USA Partners has a consensus target price of $12.25, indicating a potential downside of 32.32%. Given NGL Energy Partners’ stronger consensus rating and higher probable upside, analysts clearly believe NGL Energy Partners is more favorable than Alon USA Partners.

Profitability

This table compares NGL Energy Partners and Alon USA Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NGL Energy Partners -1.40% -4.60% -1.45%
Alon USA Partners 3.47% 28.83% 7.77%

Earnings & Valuation

This table compares NGL Energy Partners and Alon USA Partners’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NGL Energy Partners $13.02 billion 0.14 $136.81 million ($2.10) -7.38
Alon USA Partners $1.81 billion 0.63 -$4.40 million $1.15 15.74

NGL Energy Partners has higher revenue and earnings than Alon USA Partners. NGL Energy Partners is trading at a lower price-to-earnings ratio than Alon USA Partners, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

NGL Energy Partners has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, Alon USA Partners has a beta of 1.18, indicating that its share price is 18% more volatile than the S&P 500.

Summary

NGL Energy Partners beats Alon USA Partners on 8 of the 15 factors compared between the two stocks.

About NGL Energy Partners

NGL Energy Partners LP owns and operates a vertically integrated energy business. The Company’s segments are crude oil logistics, water solutions, liquids, retail propane, refined products and renewables, and corporate and other. Its crude oil logistics segment includes owned and leased crude oil storage terminals, and owned and leased pipeline injection stations. Its water solutions segment provides services for the treatment and disposal of wastewater generated from crude oil and natural gas production, and for the disposal of solids, such as tank bottoms and drilling fluids. Its liquids segment supplies natural gas liquids to retailers, wholesalers, refiners and petrochemical plants throughout the United States and in Canada. Its retail propane segment consists of the retail marketing, and sale and distribution of propane and distillates, among others. The Company’s refined products and renewables segment is engaged in gasoline, diesel, ethanol and biodiesel marketing operations.

About Alon USA Partners

Alon USA Partners, LP (Alon) is engaged principally in the business of operating a crude oil refinery in Big Spring, Texas. The Company had a crude oil throughput capacity of 73,000 barrels per day, which the Company referred to as its Big Spring refinery, as of December 31, 2016. The Company refines crude oil into finished products, which the Company markets primarily in Central and West Texas, Oklahoma, New Mexico and Arizona through its integrated wholesale distribution network to retail convenience stores and other third-party distributors. Its Big Spring refinery is located on 1,306 acres in the Permian Basin in West Texas. Major processes at its Big Spring refinery include fluid catalytic cracking, naphtha reforming, vacuum distillation, hydrotreating, aromatic extraction and alkylation. The Company is managed and operated by Alon USA Partners GP, LLC (General Partner), an indirect subsidiary of Alon USA Energy, Inc. (Alon Energy), which is its parent company.

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