Western Gas Partners (NYSE: WES) and Markwest Energy Partners (NYSE:MWE) are both mid-cap oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, earnings, profitability, institutional ownership and valuation.

Profitability

This table compares Western Gas Partners and Markwest Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Western Gas Partners 26.41% 14.68% 7.24%
Markwest Energy Partners 10.37% 2.42% 1.71%

Analyst Ratings

This is a summary of recent recommendations for Western Gas Partners and Markwest Energy Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Gas Partners 1 3 7 0 2.55
Markwest Energy Partners 0 0 0 0 N/A

Western Gas Partners currently has a consensus target price of $60.20, indicating a potential upside of 30.02%. Given Western Gas Partners’ higher possible upside, equities research analysts clearly believe Western Gas Partners is more favorable than Markwest Energy Partners.

Dividends

Western Gas Partners pays an annual dividend of $3.62 per share and has a dividend yield of 7.8%. Markwest Energy Partners does not pay a dividend. Western Gas Partners pays out 294.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Gas Partners has raised its dividend for 9 consecutive years and Markwest Energy Partners has raised its dividend for 6 consecutive years.

Insider and Institutional Ownership

61.8% of Western Gas Partners shares are owned by institutional investors. 0.0% of Western Gas Partners shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Western Gas Partners and Markwest Energy Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Western Gas Partners $1.80 billion 3.92 $591.33 million $1.23 37.64
Markwest Energy Partners N/A N/A N/A ($0.26) -160.19

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

Summary

Western Gas Partners beats Markwest Energy Partners on 11 of the 12 factors compared between the two stocks.

About Western Gas Partners

Western Gas Partners, LP is a master limited partnership (MLP) that acquires, owns, develops and operates midstream energy assets. The Company is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids (NGLs) and crude oil in the United States. The Company provides midstream services for Anadarko Petroleum Corporation (Anadarko), as well as for third-party producers and customers. The Company’s operations and activities are managed by its general partner, which is indirectly controlled by Anadarko through Western Gas Equity Partners, LP (WGP). As of December 31, 2016, its assets and investments consisted of gathering systems, treating facilities, natural gas processing plants/trains, NGL pipelines, natural gas pipelines and oil pipelines. These assets and investments are located in the Rocky Mountains (Colorado, Utah and Wyoming), North-central Pennsylvania and Texas.

About Markwest Energy Partners

MarkWest Energy Partners, L.P. (MarkWest) is a master limited partnership engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of natural gas liquids (NGLs), and the gathering and transportation of crude oil. The Company operates in four segments: Marcellus, Utica, Northeast and Southwest. The Marcellus segment provides integrated natural gas midstream services in southwestern Pennsylvania and northern West Virginia. The Company’s MarkWest Utica EMG provides gathering, processing, fractionation and marketing services. The Northeast segment assets include the Kenova, Boldman, Cobb, Kermit and Langley natural gas processing complexes, an NGL pipeline and the Siloam fractionation facility. The Company owns a system that consists of natural gas gathering pipelines, centralized compressor stations, two natural gas processing complexes and two NGL pipelines.

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