Plains All American Pipeline, L.P. (NYSE: PAA) and Williams Companies, Inc. (The) (NYSE:WMB) are both large-cap oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Volatility and Risk

Plains All American Pipeline, L.P. has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Williams Companies, Inc. (The) has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500.

Earnings & Valuation

This table compares Plains All American Pipeline, L.P. and Williams Companies, Inc. (The)’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Plains All American Pipeline, L.P. $23.87 billion 0.66 $2.01 billion $1.33 16.42
Williams Companies, Inc. (The) $8.02 billion 3.10 $3.65 billion $0.61 49.28

Williams Companies, Inc. (The) has higher revenue, but lower earnings than Plains All American Pipeline, L.P.. Plains All American Pipeline, L.P. is trading at a lower price-to-earnings ratio than Williams Companies, Inc. (The), indicating that it is currently the more affordable of the two stocks.

Dividends

Plains All American Pipeline, L.P. pays an annual dividend of $2.20 per share and has a dividend yield of 10.1%. Williams Companies, Inc. (The) pays an annual dividend of $1.20 per share and has a dividend yield of 4.0%. Plains All American Pipeline, L.P. pays out 165.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Williams Companies, Inc. (The) pays out 196.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Plains All American Pipeline, L.P. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

42.1% of Plains All American Pipeline, L.P. shares are owned by institutional investors. Comparatively, 84.6% of Williams Companies, Inc. (The) shares are owned by institutional investors. 1.3% of Plains All American Pipeline, L.P. shares are owned by insiders. Comparatively, 0.5% of Williams Companies, Inc. (The) shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Plains All American Pipeline, L.P. and Williams Companies, Inc. (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Plains All American Pipeline, L.P. 0 13 10 0 2.43
Williams Companies, Inc. (The) 0 3 10 1 2.86

Plains All American Pipeline, L.P. currently has a consensus price target of $28.65, suggesting a potential upside of 31.18%. Williams Companies, Inc. (The) has a consensus price target of $33.92, suggesting a potential upside of 12.83%. Given Plains All American Pipeline, L.P.’s higher probable upside, equities analysts plainly believe Plains All American Pipeline, L.P. is more favorable than Williams Companies, Inc. (The).

Profitability

This table compares Plains All American Pipeline, L.P. and Williams Companies, Inc. (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Plains All American Pipeline, L.P. 4.42% 10.14% 3.41%
Williams Companies, Inc. (The) 6.24% 3.43% 1.06%

About Plains All American Pipeline, L.P.

Plains All American Pipeline, L.P. owns and operates midstream energy infrastructure and provide logistics services for crude oil, natural gas liquids (NGL), natural gas and refined products. The Company operates through three segments: Transportation, Facilities, and Supply and Logistics. The Company’s transportation segment operations consist of activities associated with transporting crude oil and NGL on pipelines, gathering systems, trucks and barges. Its Facilities segment operations consist of activities associated with providing storage, terminaling and throughput services for crude oil, refined products, NGL and natural gas, as well as NGL fractionation and isomerization services and natural gas and condensate processing services. Its supply and logistics segment operations consist of the merchant-related activities, including the purchase of the United States and Canadian crude oil at the wellhead, the bulk purchase of crude oil at pipeline, terminal and rail facilities.

About Williams Companies, Inc. (The)

The Williams Companies, Inc. is an energy infrastructure company. The Company is focused on connecting North America’s hydrocarbon resource plays to markets for natural gas, natural gas liquids (NGL), and olefins. As of December 31, 2016, its interstate gas pipelines, midstream and olefins production interests were held through its investment in Williams Partners L.P. (WPZ). The Company’s segments include Williams Partners, Williams NGL & Petchem Services and Other. The Williams Partners segment includes its consolidated master limited partnership, WPZ. The gas pipeline business includes interstate natural gas pipelines and pipeline joint project investments. The midstream business provides natural gas gathering, treating, processing and compression services. The Williams NGL & Petchem Services segment includes its Texas Belle pipeline and certain other domestic olefins pipeline assets. Other segment includes its corporate operations and Canadian construction services company.

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