Magellan Midstream Partners (NYSE:MMP) and Plains All American Pipeline (NYSE:PAA) 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, earnings, risk, profitability, dividends, analyst recommendations and valuation.
Analyst Recommendations
This is a summary of current ratings and recommmendations for Magellan Midstream Partners and Plains All American Pipeline, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Magellan Midstream Partners | 0 | 2 | 16 | 0 | 2.89 |
| Plains All American Pipeline | 2 | 6 | 11 | 0 | 2.47 |
Magellan Midstream Partners currently has a consensus target price of $53.8333, suggesting a potential upside of 31.24%. Plains All American Pipeline has a consensus target price of $16.2105, suggesting a potential upside of 92.75%. Given Plains All American Pipeline's higher possible upside, analysts clearly believe Plains All American Pipeline is more favorable than Magellan Midstream Partners.
Profitability
This table compares Magellan Midstream Partners and Plains All American Pipeline's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Magellan Midstream Partners | 38.20% | 43.14% | 13.81% |
| Plains All American Pipeline | -4.90% | 19.57% | 7.20% |
Volatility & Risk
Magellan Midstream Partners has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500. Comparatively, Plains All American Pipeline has a beta of 2.37, suggesting that its share price is 137% more volatile than the S&P 500.
Valuation and Earnings
This table compares Magellan Midstream Partners and Plains All American Pipeline's gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Magellan Midstream Partners | $2.73 billion | 3.38 | $1.02 billion | $4.76 | 8.62 |
| Plains All American Pipeline | $33.67 billion | 0.18 | $2.17 billion | $2.51 | 3.35 |
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.
Insider & Institutional Ownership
65.0% of Magellan Midstream Partners shares are held by institutional investors. Comparatively, 48.2% of Plains All American Pipeline shares are held by institutional investors. 0.3% of Magellan Midstream Partners shares are held by company insiders. Comparatively, 1.1% of Plains All American Pipeline shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Dividends
Magellan Midstream Partners pays an annual dividend of $4.11 per share and has a dividend yield of 10.0%. Plains All American Pipeline pays an annual dividend of $0.72 per share and has a dividend yield of 8.6%. 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. Plains All American Pipeline pays out 28.7% of its earnings in the form of a dividend. Magellan Midstream Partners has increased its dividend for 10 consecutive years and Plains All American Pipeline 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.
Summary
Magellan Midstream Partners beats Plains All American Pipeline on 11 of the 17 factors compared between the two stocks.
