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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Pembina Pipeline and Kinder Morgan, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pembina Pipeline 0 1 3 0 2.75
Kinder Morgan 0 8 9 0 2.53

Kinder Morgan has a consensus price target of $23.00, suggesting a potential upside of 28.92%. Given Kinder Morgan’s higher probable upside, analysts clearly believe Kinder Morgan is more favorable than Pembina Pipeline.

Profitability

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

Net Margins Return on Equity Return on Assets
Pembina Pipeline 11.66% 8.36% 3.65%
Kinder Morgan 10.39% 4.33% 1.93%

Earnings & Valuation

This table compares Pembina Pipeline and Kinder Morgan’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pembina Pipeline $3.22 billion 5.48 $351.92 million $0.99 35.45
Kinder Morgan $13.06 billion 3.05 $708.00 million $0.56 31.86

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

Dividends

Pembina Pipeline pays an annual dividend of $1.70 per share and has a dividend yield of 4.8%. Kinder Morgan pays an annual dividend of $0.50 per share and has a dividend yield of 2.8%. Pembina Pipeline pays out 171.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kinder Morgan pays out 89.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

42.5% of Pembina Pipeline shares are owned by institutional investors. Comparatively, 60.9% of Kinder Morgan shares are owned by institutional investors. 14.0% of Kinder Morgan shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Pembina Pipeline has a beta of 0.74, meaning that its share price is 26% less volatile than the S&P 500. Comparatively, Kinder Morgan has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Summary

Pembina Pipeline beats Kinder Morgan on 9 of the 16 factors compared between the two stocks.

About Pembina Pipeline

Pembina Pipeline Corporation is an energy transportation and service provider. The Company operates through four segments. The Conventional Pipelines segment consists of the tariff-based operations of pipelines and related facilities to deliver crude oil, condensate and natural gas liquids (NGL) in Alberta, British Columbia, Saskatchewan, and North Dakota, United States. The Oil Sands & Heavy Oil segment consists of the Syncrude, Horizon, Nipisi and Mitsue Pipelines, and the Cheecham Lateral. These pipelines and related facilities deliver synthetic crude oil produced from oil sands under long-term cost-of-service arrangements. The Gas Services segment consists of natural gas gathering and processing facilities. The Midstream segment consists of the Company’s interests in extraction and fractionation facilities, terminalling and storage hub services under a mixture of short, medium and long-term contractual arrangements.

About Kinder Morgan

Kinder Morgan, Inc. is an energy infrastructure company. It operates through five segments. Its Natural Gas Pipelines segment is engaged in the ownership and operation of interstate and intrastate natural gas pipeline and storage systems, and liquefied natural gas facilities, among others. Its CO2 segment is engaged in the production, transportation and marketing of carbon dioxide (CO2) to oil fields and the ownership and operation of a crude oil pipeline system, among others. Its Terminals segment is engaged in the ownership and/or operation of liquids and bulk terminal facilities located throughout the United States and portions of Canada, and Jones Act tankers. Its Products Pipelines segment is engaged in the ownership and operation of refined petroleum products, natural gas liquids and crude oil and condensate pipelines. Its Kinder Morgan Canada segment is engaged in the ownership and operation of the Trans Mountain pipeline system and Jet Fuel aviation turbine fuel pipeline.

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