FutureFuel (NYSE:FF) & Western Midstream Partners (NYSE:WES) Critical Analysis

FutureFuel (NYSE:FF) and Western Midstream Partners (NYSE:WES) are both energy companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.

Valuation & Earnings

This table compares FutureFuel and Western Midstream Partners”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FutureFuel	$95.74 million	2.33	-$49.40 million	($0.70)	-7.28
Western Midstream Partners	$4.33 billion	4.34	$1.18 billion	$3.18	14.32

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

Dividends

FutureFuel pays an annual dividend of $0.04 per share and has a dividend yield of 0.8%. Western Midstream Partners pays an annual dividend of $3.72 per share and has a dividend yield of 8.2%. FutureFuel pays out -5.7% of its earnings in the form of a dividend. Western Midstream Partners pays out 117.0% 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 Midstream Partners has raised its dividend for 5 consecutive years. Western Midstream Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

44.6% of FutureFuel shares are owned by institutional investors. Comparatively, 84.8% of Western Midstream Partners shares are owned by institutional investors. 42.6% of FutureFuel shares are owned by company insiders. Comparatively, 0.0% of Western Midstream Partners shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares FutureFuel and Western Midstream Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FutureFuel	-19.94%	-19.75%	-15.47%
Western Midstream Partners	29.44%	33.13%	8.74%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for FutureFuel and Western Midstream Partners, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FutureFuel	1	0	0	0	1.00
Western Midstream Partners	0	6	3	2	2.64

Western Midstream Partners has a consensus target price of $49.89, indicating a potential upside of 9.53%. Given Western Midstream Partners’ stronger consensus rating and higher possible upside, analysts plainly believe Western Midstream Partners is more favorable than FutureFuel.

Risk and Volatility

FutureFuel has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500. Comparatively, Western Midstream Partners has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500.

Summary

Western Midstream Partners beats FutureFuel on 15 of the 18 factors compared between the two stocks.

About FutureFuel

FutureFuel Corp., together with its subsidiaries, manufactures and sells diversified chemical, bio-based fuel, and bio-based specialty chemical products in the United States. The company operates through two segments, Chemicals and Biofuels. The Chemicals segment provides various custom chemicals that are used in the coatings, chemical intermediates, industrial and consumer cleaning, oil and gas, and specialty polymers industries; and performance chemicals, such as polymer modifiers, glycerin products, and various specialty chemicals and solvents. The Biofuels segment is involved in the production and sale of biodiesel and petrodiesel blends; and markets its biodiesel products directly to customers through trucks, barges, and rail cars. FutureFuel Corp. is headquartered in Saint Louis, Missouri.

About Western Midstream Partners

Western Midstream Partners, LP, together with its subsidiaries, operates as a midstream energy company primarily in the United States. It is involved in gathering, compressing, treating, processing, and transporting natural gas; gathering, stabilizing, and transporting condensate, natural gas liquids (NGLs), and crude oil; and gathering and disposing produced water. The company also buys and sells natural gas, NGLs, and condensate. It operates assets located in Texas, New Mexico, the Rocky Mountains, and North-central Pennsylvania. Western Midstream Holdings, LLC operates as the general partner of the company. The company was formerly known as Western Gas Equity Partners, LP and changed its name to Western Midstream Partners, LP in February 2019. Western Midstream Partners, LP was incorporated in 2007 and is based in The Woodlands, Texas.