The Williams Companies (NYSE:WMB) and Targa Resources (NYSE:TRGP) are both oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.
Analyst Recommendations
This is a summary of current ratings and price targets for The Williams Companies and Targa Resources, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| The Williams Companies | 0 | 2 | 9 | 1 | 2.92 |
| Targa Resources | 0 | 3 | 17 | 1 | 2.90 |
The Williams Companies currently has a consensus price target of $25.00, suggesting a potential upside of 5.13%. Targa Resources has a consensus price target of $33.7778, suggesting a potential upside of 0.29%. Given The Williams Companies' stronger consensus rating and higher probable upside, equities analysts clearly believe The Williams Companies is more favorable than Targa Resources.
Profitability
This table compares The Williams Companies and Targa Resources' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| The Williams Companies | 1.86% | 7.77% | 2.70% |
| Targa Resources | -20.83% | 5.97% | 2.44% |
Valuation and Earnings
This table compares The Williams Companies and Targa Resources' top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| The Williams Companies | $8.20 billion | 3.50 | $850 million | $0.99 | 23.86 |
| Targa Resources | $8.67 billion | 0.88 | $-209,200,000.00 | ($0.81) | -41.21 |
The Williams Companies has higher earnings, but lower revenue than Targa Resources. Targa Resources is trading at a lower price-to-earnings ratio than The Williams Companies, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
The Williams Companies has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500. Comparatively, Targa Resources has a beta of 2.99, suggesting that its stock price is 199% more volatile than the S&P 500.
Dividends
The Williams Companies pays an annual dividend of $1.64 per share and has a dividend yield of 6.9%. Targa Resources pays an annual dividend of $0.40 per share and has a dividend yield of 1.2%. The Williams Companies pays out 165.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Targa Resources pays out -49.4% of its earnings in the form of a dividend. The Williams Companies has increased its dividend for 1 consecutive years and Targa Resources has increased its dividend for 1 consecutive years.
Insider and Institutional Ownership
83.6% of The Williams Companies shares are owned by institutional investors. Comparatively, 84.5% of Targa Resources shares are owned by institutional investors. 0.3% of The Williams Companies shares are owned by company insiders. Comparatively, 1.5% of Targa Resources shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Summary
The Williams Companies beats Targa Resources on 10 of the 16 factors compared between the two stocks.
