TransCanada Corporation (NYSE: TRP) and Phillips 66 Partners (NYSE:PSXP) are both mid-cap oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.

Dividends

TransCanada Corporation pays an annual dividend of $1.85 per share and has a dividend yield of 3.7%. Phillips 66 Partners pays an annual dividend of $2.46 per share and has a dividend yield of 5.3%. TransCanada Corporation pays out 215.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Phillips 66 Partners pays out 101.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TransCanada Corporation has raised its dividend for 3 consecutive years. Phillips 66 Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

TransCanada Corporation has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, Phillips 66 Partners has a beta of 1.51, meaning that its stock price is 51% more volatile than the S&P 500.

Earnings and Valuation

This table compares TransCanada Corporation and Phillips 66 Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TransCanada Corporation $10.91 billion 4.01 $5.15 billion $0.86 58.44
Phillips 66 Partners $781.00 million 6.13 $461.00 million $2.43 19.07

TransCanada Corporation has higher revenue and earnings than Phillips 66 Partners. Phillips 66 Partners is trading at a lower price-to-earnings ratio than TransCanada Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for TransCanada Corporation and Phillips 66 Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TransCanada Corporation 0 0 9 0 3.00
Phillips 66 Partners 1 1 8 0 2.70

TransCanada Corporation currently has a consensus target price of $65.21, suggesting a potential upside of 29.74%. Phillips 66 Partners has a consensus target price of $57.13, suggesting a potential upside of 23.30%. Given TransCanada Corporation’s stronger consensus rating and higher possible upside, equities research analysts plainly believe TransCanada Corporation is more favorable than Phillips 66 Partners.

Profitability

This table compares TransCanada Corporation and Phillips 66 Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TransCanada Corporation 8.16% 12.08% 3.04%
Phillips 66 Partners 45.35% 23.01% 9.97%

Institutional & Insider Ownership

56.8% of TransCanada Corporation shares are held by institutional investors. Comparatively, 43.0% of Phillips 66 Partners shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

About TransCanada Corporation

TransCanada Corporation is an energy infrastructure company. The Company is engaged in the development and operation of North American energy infrastructure, including natural gas and liquids pipelines, power generation and natural gas storage facilities. Its segments include Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Energy. The Company operates in three businesses: Natural Gas Pipelines, Liquids Pipelines and Energy. The Natural Gas Pipelines and Liquids Pipelines segments principally consist of its respective natural gas and liquids pipelines in Canada, the United States and Mexico, as well as its regulated natural gas storage operations in the United States. The Energy segment includes its power operations and the non-regulated natural gas storage business in Canada. TransCanada PipeLines Limited (TCPL) is its principal operating subsidiary.

About Phillips 66 Partners

Phillips 66 Partners LP (Phillips 66) owns, operates, develops and acquires fee-based crude oil, refined petroleum product and natural gas liquids (NGL) pipelines, terminals and other transportation and midstream assets. The Company’s assets consist of systems, such as Clifton Ridge Crude System, Eagle Ford Gathering System, Ponca Crude System, Billings Crude System, Borger Crude System, Sweeny to Pasadena Products System, Hartford Connector Products System, Gold Line Products System, Cross-Channel Connector Products System, Ponca Products System, Billings Products System, Bayway Products System, Standish Pipeline, Borger Products System, River Parish NGL System, Medford Spheres, Bayway Rail Rack, Ferndale Rail Rack, Sand Hills/Southern Hills Joint Ventures, Explorer Pipeline Joint Venture, Bakken Joint Ventures, Bayou Bridge Pipeline Joint Venture, STACK Pipeline Joint Venture, and Sweeny Fractionator and Clemens Caverns.

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