Plains All American Pipeline (NYSE:PAA) and Magellan Midstream Partners (NYSE:MMP) are both mid-cap oils/energy companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitability and dividends.
Profitability
This table compares Plains All American Pipeline and Magellan Midstream Partners' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Plains All American Pipeline | -8.71% | 19.02% | 6.31% |
| Magellan Midstream Partners | 35.61% | 37.91% | 11.65% |
Risk and Volatility
Plains All American Pipeline has a beta of 2.22, suggesting that its stock price is 122% more volatile than the S&P 500. Comparatively, Magellan Midstream Partners has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.
Dividends
Plains All American Pipeline pays an annual dividend of $0.72 per share and has a dividend yield of 8.1%. Magellan Midstream Partners pays an annual dividend of $4.11 per share and has a dividend yield of 9.1%. Plains All American Pipeline pays out 28.7% of its earnings in the form of a dividend. Magellan Midstream Partners pays out 86.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Magellan Midstream Partners has increased its dividend for 1 consecutive years. Magellan Midstream Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Ratings
This is a summary of current ratings and target prices for Plains All American Pipeline and Magellan Midstream Partners, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Plains All American Pipeline | 0 | 4 | 10 | 0 | 2.71 |
| Magellan Midstream Partners | 1 | 10 | 9 | 0 | 2.40 |
Plains All American Pipeline currently has a consensus price target of $19.1667, indicating a potential upside of 113.44%. Magellan Midstream Partners has a consensus price target of $49.0588, indicating a potential upside of 9.24%. Given Plains All American Pipeline's stronger consensus rating and higher probable upside, equities analysts clearly believe Plains All American Pipeline is more favorable than Magellan Midstream Partners.
Valuation and Earnings
This table compares Plains All American Pipeline and Magellan Midstream Partners' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Plains All American Pipeline | $33.67 billion | 0.19 | $2.17 billion | $2.51 | 3.55 |
| Magellan Midstream Partners | $2.73 billion | 3.68 | $1.02 billion | $4.76 | 9.45 |
Plains All American Pipeline has higher revenue and earnings than Magellan Midstream Partners. Plains All American Pipeline is trading at a lower price-to-earnings ratio than Magellan Midstream Partners, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
45.6% of Plains All American Pipeline shares are held by institutional investors. Comparatively, 62.0% of Magellan Midstream Partners shares are held by institutional investors. 1.1% of Plains All American Pipeline shares are held by insiders. Comparatively, 0.3% of Magellan Midstream Partners shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Summary
Magellan Midstream Partners beats Plains All American Pipeline on 9 of the 17 factors compared between the two stocks.
