Phillips 66 Partners (NYSE:PSXP) 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 dividends, institutional ownership, risk, valuation, earnings, profitability and analyst recommendations.
Profitability
This table compares Phillips 66 Partners and Magellan Midstream Partners' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Phillips 66 Partners | 56.75% | 41.31% | 13.24% |
| Magellan Midstream Partners | 35.61% | 37.91% | 11.65% |
Analyst Recommendations
This is a summary of recent ratings and target prices for Phillips 66 Partners and Magellan Midstream Partners, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Phillips 66 Partners | 0 | 7 | 5 | 0 | 2.42 |
| Magellan Midstream Partners | 1 | 10 | 9 | 0 | 2.40 |
Phillips 66 Partners presently has a consensus target price of $36.1818, suggesting a potential upside of 13.03%. Magellan Midstream Partners has a consensus target price of $49.0588, suggesting a potential upside of 9.78%. Given Phillips 66 Partners' stronger consensus rating and higher possible upside, analysts clearly believe Phillips 66 Partners is more favorable than Magellan Midstream Partners.
Dividends
Phillips 66 Partners pays an annual dividend of $3.50 per share and has a dividend yield of 10.9%. Magellan Midstream Partners pays an annual dividend of $4.11 per share and has a dividend yield of 9.2%. Phillips 66 Partners pays out 81.6% 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 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. Phillips 66 Partners has increased its dividend for 1 consecutive years and Magellan Midstream Partners has increased its dividend for 1 consecutive years. Phillips 66 Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
22.2% of Phillips 66 Partners shares are held by institutional investors. Comparatively, 62.0% of Magellan Midstream Partners shares are held by institutional investors. 0.3% of Magellan Midstream Partners shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Earnings and Valuation
This table compares Phillips 66 Partners and Magellan Midstream Partners' gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Phillips 66 Partners | $1.67 billion | 4.38 | $923 million | $4.29 | 7.46 |
| Magellan Midstream Partners | $2.73 billion | 3.66 | $1.02 billion | $4.76 | 9.39 |
Magellan Midstream Partners has higher revenue and earnings than Phillips 66 Partners. Phillips 66 Partners 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.
Risk & Volatility
Phillips 66 Partners has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500. Comparatively, Magellan Midstream Partners has a beta of 1.08, suggesting that its share price is 8% more volatile than the S&P 500.
Summary
Phillips 66 Partners beats Magellan Midstream Partners on 9 of the 16 factors compared between the two stocks.
