Contrasting Markwest Energy Partners (NYSE:MWE) & Western Gas Equity Partners (WGP)

Markwest Energy Partners (NYSE: MWE) and Western Gas Equity Partners (NYSE:WGP) are both mid-cap oil & gas refining and marketing – nec companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Markwest Energy Partners and Western Gas Equity Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Markwest Energy Partners 0 0 0 0 N/A
Western Gas Equity Partners 0 3 7 0 2.70

Western Gas Equity Partners has a consensus price target of $49.60, suggesting a potential upside of 32.98%. Given Western Gas Equity Partners’ higher possible upside, analysts clearly believe Western Gas Equity Partners is more favorable than Markwest Energy Partners.

Profitability

This table compares Markwest Energy Partners and Western Gas Equity Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Markwest Energy Partners 10.37% 2.42% 1.71%
Western Gas Equity Partners 16.96% 8.99% 4.69%

Dividends

Western Gas Equity Partners pays an annual dividend of $2.19 per share and has a dividend yield of 5.9%. Markwest Energy Partners does not pay a dividend. Western Gas Equity Partners pays out 132.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Gas Equity Partners has increased its dividend for 4 consecutive years.

Insider and Institutional Ownership

18.5% of Western Gas Equity Partners shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Markwest Energy Partners and Western Gas Equity Partners’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Markwest Energy Partners N/A N/A N/A ($0.26) -160.19
Western Gas Equity Partners $1.80 billion 4.53 $345.77 million $1.65 22.61

Western Gas Equity Partners has higher revenue and earnings than Markwest Energy Partners. Markwest Energy Partners is trading at a lower price-to-earnings ratio than Western Gas Equity Partners, indicating that it is currently the more affordable of the two stocks.

Summary

Western Gas Equity Partners beats Markwest Energy Partners on 11 of the 12 factors compared between the two stocks.

Markwest Energy Partners Company Profile

MarkWest Energy Partners, L.P. (MarkWest) is a master limited partnership engaged in the gathering, processing and transportation of natural gas; the gathering, transportation, fractionation, storage and marketing of natural gas liquids (NGLs), and the gathering and transportation of crude oil. The Company operates in four segments: Marcellus, Utica, Northeast and Southwest. The Marcellus segment provides integrated natural gas midstream services in southwestern Pennsylvania and northern West Virginia. The Company’s MarkWest Utica EMG provides gathering, processing, fractionation and marketing services. The Northeast segment assets include the Kenova, Boldman, Cobb, Kermit and Langley natural gas processing complexes, an NGL pipeline and the Siloam fractionation facility. The Company owns a system that consists of natural gas gathering pipelines, centralized compressor stations, two natural gas processing complexes and two NGL pipelines.

Western Gas Equity Partners Company Profile

Western Gas Equity Partners, LP is a limited partnership. The Company is formed to own approximately three types of partnership interests in Western Gas Partners, LP (WES). WES is an master limited partnership (MLP) engaged in the business of gathering, compressing, treating, processing and transporting natural gas, and gathering, stabilizing and transporting condensate, natural gas liquids (NGLs) and crude oil. WES provides these midstream services for Anadarko Petroleum Corporation (Anadarko), as well as for third-party producers and customers. Its assets and investments are located in the Rocky Mountains (Colorado, Utah and Wyoming), North-central Pennsylvania and Texas. The Bison treating facility treats and compresses gas from coal-bed methane wells in the Powder River Basin of Wyoming. MIGC, LLC receives gas from various coal-bed methane gathering systems in the Powder River Basin and the Hilight system, as well as from WBI Energy Transmission, Inc.

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