Energy Transfer LP Unit (NYSE:ET) and Summit Midstream Partners (NYSE:SMLP) are both oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, dividends, risk, institutional ownership and valuation.

Volatility and Risk

Energy Transfer LP Unit has a beta of 1.71, indicating that its stock price is 71% more volatile than the S&P 500. Comparatively, Summit Midstream Partners has a beta of 1.7, indicating that its stock price is 70% more volatile than the S&P 500.

Profitability

This table compares Energy Transfer LP Unit and Summit Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Energy Transfer LP Unit 3.18% 6.15% 2.15%
Summit Midstream Partners 8.36% 13.80% 4.48%

Institutional & Insider Ownership

56.2% of Energy Transfer LP Unit shares are owned by institutional investors. Comparatively, 38.8% of Summit Midstream Partners shares are owned by institutional investors. 3.3% of Energy Transfer LP Unit shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations for Energy Transfer LP Unit and Summit Midstream Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Energy Transfer LP Unit 0 0 5 1 3.17
Summit Midstream Partners 2 4 2 0 2.00

Energy Transfer LP Unit presently has a consensus price target of $19.75, indicating a potential upside of 30.45%. Summit Midstream Partners has a consensus price target of $14.63, indicating a potential upside of 75.78%. Given Summit Midstream Partners’ higher probable upside, analysts clearly believe Summit Midstream Partners is more favorable than Energy Transfer LP Unit.

Valuation & Earnings

This table compares Energy Transfer LP Unit and Summit Midstream Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Energy Transfer LP Unit $54.09 billion 0.73 $1.66 billion $1.15 13.17
Summit Midstream Partners $506.65 million 1.23 $42.18 million $0.06 138.67

Energy Transfer LP Unit has higher revenue and earnings than Summit Midstream Partners. Energy Transfer LP Unit is trading at a lower price-to-earnings ratio than Summit Midstream Partners, indicating that it is currently the more affordable of the two stocks.

Dividends

Energy Transfer LP Unit pays an annual dividend of $1.22 per share and has a dividend yield of 8.1%. Summit Midstream Partners pays an annual dividend of $2.30 per share and has a dividend yield of 27.6%. Energy Transfer LP Unit pays out 106.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Summit Midstream Partners pays out 3,833.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Energy Transfer LP Unit beats Summit Midstream Partners on 10 of the 17 factors compared between the two stocks.

Energy Transfer LP Unit Company Profile

Energy Transfer LP provides energy-related services in the United States and China. The company owns and operates approximately 9,400 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas; and approximately 12,200 miles of interstate natural gas pipelines. It sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. The company owns and operates natural gas gathering and natural gas liquid (NGL) pipelines, processing plants, treating facilities, and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, Ohio, and Louisiana; natural gas gathering, oil pipeline, and oil stabilization facilities in South Texas; a natural gas gathering system in Ohio; and transportation and supply of water to natural gas producers in Pennsylvania. It also owns approximately 4,769 miles of NGL pipelines; NGL and propane fractionation facilities; NGL storage facilities with working storage capacity of approximately 45 million barrels (Bbls); and other NGL storage assets and terminals with an aggregate storage capacity of approximately 11 million Bbls. The company also sells gasoline, middle distillates, and motor fuel at retail, as well as crude oil, NGLs, and refined products; operates convenience stores; and distributes motor fuels and other petroleum products. It provides natural gas compression services; carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration, and British thermal unit management services; and manages coal and natural resources properties, as well as sells standing timber, leases coal-related infrastructure facilities, collects oil and gas royalties, and generates a total of 75 megawatts electrical power. The company was formerly known as Energy Transfer Equity, L.P. and changed its name to Energy Transfer LP in October 2018. Energy Transfer LP was founded in 2002 and is based in Dallas, Texas.

Summit Midstream Partners Company Profile

Summit Midstream Partners, LP focuses on owning, developing, and operating midstream energy infrastructure assets primarily shale formations in the continental United States. The company provides natural gas gathering, treating, and processing services, as well as crude oil and produced water gathering services. Its unconventional resource basins include the Appalachian Basin, which comprise the Utica and Point Pleasant shale formations in southeastern Ohio, and the Marcellus Shale formation in northern West Virginia; the Williston Basin that consists of the Bakken and Three Forks shale formations in northwestern North Dakota; the Denver-Julesburg Basin, which include the Niobrara and Codell shale formations in northeastern Colorado; the northern Delaware Basin that comprise the Wolfcamp and Bone Spring formations, in southeastern New Mexico; the Piceance Basin, which include the Mesaverde formation, and the Mancos and Niobrara shale formations in western Colorado and eastern Utah; and the Fort Worth Basin that comprises the Barnett Shale formation in north-central Texas. The company serves natural gas and crude oil producers. Summit Midstream GP, LLC operates as a general partner of the company. Summit Midstream Partners, LP was founded in 2009 and is headquartered in The Woodlands, Texas.

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