Penntex Midstream Partners (NASDAQ: PTXP) and Targa Resources (NYSE:TRGP) are both energy companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.
Analyst Ratings
This is a summary of current ratings and target prices for Penntex Midstream Partners and Targa Resources, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Penntex Midstream Partners | 0 | 6 | 1 | 0 | 2.14 |
| Targa Resources | 0 | 7 | 10 | 1 | 2.67 |
Penntex Midstream Partners presently has a consensus price target of $19.17, indicating a potential downside of 4.12%. Targa Resources has a consensus price target of $54.12, indicating a potential upside of 22.58%. Given Targa Resources’ stronger consensus rating and higher probable upside, analysts plainly believe Targa Resources is more favorable than Penntex Midstream Partners.
Dividends
Penntex Midstream Partners pays an annual dividend of $1.18 per share and has a dividend yield of 5.9%. Targa Resources pays an annual dividend of $3.64 per share and has a dividend yield of 8.2%. Penntex Midstream Partners pays out 472.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Targa Resources has raised its dividend for 6 consecutive years. Targa Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Penntex Midstream Partners and Targa Resources’ gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Penntex Midstream Partners | N/A | N/A | N/A | $0.25 | 79.96 |
| Targa Resources | $7.65 billion | 1.14 | $1.02 billion | N/A | N/A |
Targa Resources has higher revenue and earnings than Penntex Midstream Partners.
Insider and Institutional Ownership
55.0% of Penntex Midstream Partners shares are owned by institutional investors. Comparatively, 81.6% of Targa Resources shares are owned by institutional investors. 1.9% of Targa Resources shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Profitability
This table compares Penntex Midstream Partners and Targa Resources’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Penntex Midstream Partners | 34.54% | 11.00% | 5.81% |
| Targa Resources | -2.92% | -3.45% | -1.59% |
Risk & Volatility
Penntex Midstream Partners has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.Comparatively, Targa Resources has a beta of 2.21, indicating that its share price is 121% more volatile than the S&P 500.
Summary
Targa Resources beats Penntex Midstream Partners on 11 of the 14 factors compared between the two stocks.
About Penntex Midstream Partners
PennTex Midstream Partners, LP, focuses on owning, operating, acquiring and developing midstream energy infrastructure assets in North America. The Company owns and operates midstream gathering, processing and transportation assets in northern Louisiana. The Company provides natural gas gathering and processing and residue gas and natural gas liquid (NGL) transportation services to producers focused on the Cotton Valley formation in northern Louisiana. The Company’s assets primarily consisted of natural gas gathering pipeline, two 200 million cubic feet per day (MMcf/d) design-capacity cryogenic natural gas processing plants, and residue gas and NGL transportation pipelines, as of December 31, 2016. In addition to providing midstream services to its primary customer with its existing assets, the Company pursues other opportunities for organic development and growth as producers in its region continue to develop their acreage.
About Targa Resources
Targa Resources Corp. is a midstream energy company in North America. It provides midstream services. Its segments include Gathering and Processing, and Logistics and Marketing (Downstream Business). It is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling natural gas liquids (NGLs) and NGL products, including services to liquefied petroleum gas exporters; gathering, storing and terminalling crude oil, and storing, terminalling and selling refined petroleum products. The Gathering and Processing segment consists of gathering, compressing, dehydrating, treating, conditioning, processing, and marketing natural gas and gathering crude oil. The Logistics and Marketing segment includes all the activities necessary to convert mixed NGLs into NGL products and provides certain services, such as storing, fractionating, terminalling, transporting and marketing of NGLs and NGL products.
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