NuStar Energy (NYSE: SHLX) and Shell Midstream Partners (NYSE:SHLX) 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 profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares NuStar Energy and Shell Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NuStar Energy 11.83% 11.32% 3.35%
Shell Midstream Partners 74.14% -295.18% 23.25%

Institutional & Insider Ownership

46.5% of NuStar Energy shares are held by institutional investors. Comparatively, 54.8% of Shell Midstream Partners shares are held by institutional investors. 4.1% of NuStar Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for NuStar Energy and Shell Midstream Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NuStar Energy 0 8 1 0 2.11
Shell Midstream Partners 0 3 7 0 2.70

NuStar Energy currently has a consensus price target of $28.00, suggesting a potential upside of 1.97%. Shell Midstream Partners has a consensus price target of $28.15, suggesting a potential upside of 26.18%. Given Shell Midstream Partners’ stronger consensus rating and higher possible upside, analysts plainly believe Shell Midstream Partners is more favorable than NuStar Energy.

Dividends

NuStar Energy pays an annual dividend of $2.40 per share and has a dividend yield of 8.7%. Shell Midstream Partners pays an annual dividend of $1.46 per share and has a dividend yield of 6.5%. NuStar Energy pays out 375.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners pays out 114.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners has increased its dividend for 2 consecutive years.

Earnings and Valuation

This table compares NuStar Energy and Shell Midstream Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NuStar Energy $1.81 billion 1.62 $147.96 million $0.64 42.91
Shell Midstream Partners $470.10 million 10.62 $372.60 million $1.28 17.43

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

Risk and Volatility

NuStar Energy has a beta of 1.67, meaning that its share price is 67% more volatile than the S&P 500. Comparatively, Shell Midstream Partners has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500.

Summary

Shell Midstream Partners beats NuStar Energy on 11 of the 17 factors compared between the two stocks.

About NuStar Energy

NuStar Energy L.P. engages in the terminalling, storage, and marketing of petroleum products in Texas. The company also engages in the transportation of petroleum products and anhydrous ammonia. It operates through three segments: Pipeline, Storage, and Fuels Marketing. The Pipeline segment transports refined petroleum products, crude oil, and anhydrous ammonia. The Storage segment owns terminal and storage facilities, which offer storage, handling, and other services for petroleum products, crude oil, specialty chemicals, and other liquids. This segment also provides pilotage, tug assistance, line handling, launch, emergency response, and other ship services. The Fuels Marketing segment is involved in the purchase of crude oil, fuel oil, bunker fuel, fuel oil blending components, and other refined products for resale. As of December 31, 2017, the company had 3,130 miles of refined product pipelines and 1,930 miles of crude oil pipelines in Texas, Oklahoma, Kansas, Colorado, and New Mexico; a 1,920-mile refined product pipeline originating in southern Kansas and terminating at Jamestown, North Dakota; a 450-mile refined product pipeline originating at Andeavor's Mandan, North Dakota refinery and terminating in Minneapolis, Minnesota; 2,000 miles of anhydrous ammonia pipelines; and 81 terminal and storage facilities, which offer approximately 96 million barrels of storage capacity. The company has operations in the United States, Canada, Mexico, the Netherlands, and the United Kingdom. Riverwalk Logistics, L.P. serves as the general partner of the company. NuStar Energy L.P. was founded in 1999 and is headquartered in San Antonio, Texas.

About Shell Midstream Partners

Shell Midstream Partners, L.P. owns, operates, develops, and acquires pipelines and other midstream assets in the United States. Its crude oil pipeline systems include a 350 miles of Zydeco pipeline system; a 130-miles of delta pipeline; a 174-mile offshore Gulf of Mexico corridor pipeline; and a 75-mile offshore pipeline. The company also has interests in Mars pipeline system that is approximately 163 miles that delivers production received from the Mississippi Canyon area and Green Canyon and Walker Ridge to salt dome caverns in Clovelly, Louisiana; and a 105-mile Odyssey pipeline system, which transports crude oil in the offshore eastern Gulf of Mexico to markets in Louisiana. In addition, it has interests in a 367-mile Gulf of Mexico offshore pipeline that transports crude oil to Texas and Louisiana; a 70-mile crude oil pipeline that provides transportation for various oil producers in the eastern Gulf of Mexico; and a 89-mile crude oil Endymion pipeline system that offers transportation for various oil producers in the eastern Gulf of Mexico. In addition, it holds interests in Mars pipeline system that is approximately 163 miles that delivers production received from the Mississippi Canyon area and Green Canyon and Walker Ridge to salt dome caverns in Clovelly, Louisiana. The company's refined products pipeline systems consist of 160-mile Bengal pipeline system connecting four refineries in southern Louisiana to long-haul transportation pipelines; approximately 5,500 miles of pipeline connecting refineries along the Gulf Coast to approximately 265 marketing terminals; and Explorer pipeline system, an 1,830-mile common carrier petroleum products pipeline system, which extends from the Gulf Coast to the Midwest. Shell Midstream Partners GP LLC serves as the general partner of Shell Midstream Partners, L.P. The company was founded in 2014 and is based in Houston, Texas. Shell Midstream Partners, L.P. operates as a subsidiary of Shell Pipeline Company LP.

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