Critical Review: Western Refining Logistics (WNRL) and Penntex Midstream Partners (NASDAQ:PTXP)

Western Refining Logistics (NYSE: WNRL) and Penntex Midstream Partners (NASDAQ:PTXP) are both small-cap energy companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, institutional ownership, dividends, valuation, analyst recommendations, earnings and risk.

Insider and Institutional Ownership

40.1% of Western Refining Logistics shares are held by institutional investors. Comparatively, 55.0% of Penntex Midstream Partners shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Western Refining Logistics and Penntex Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Western Refining Logistics 3.05% 78.84% 12.72%
Penntex Midstream Partners 34.54% 11.00% 5.81%

Earnings and Valuation

This table compares Western Refining Logistics and Penntex Midstream Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Western Refining Logistics N/A N/A N/A $1.07 22.29
Penntex Midstream Partners N/A N/A N/A $0.26 76.92

Western Refining Logistics is trading at a lower price-to-earnings ratio than Penntex Midstream Partners, indicating that it is currently the more affordable of the two stocks.

Dividends

Western Refining Logistics pays an annual dividend of $1.87 per share and has a dividend yield of 7.8%. Penntex Midstream Partners pays an annual dividend of $1.18 per share and has a dividend yield of 5.9%. Western Refining Logistics pays out 174.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Penntex Midstream Partners pays out 453.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Penntex Midstream Partners has raised its dividend for 3 consecutive years. Western Refining Logistics is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and target prices for Western Refining Logistics and Penntex Midstream Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Refining Logistics 0 1 0 0 2.00
Penntex Midstream Partners 0 4 0 0 2.00

Penntex Midstream Partners has a consensus price target of $20.00, suggesting a potential upside of 0.00%. Given Penntex Midstream Partners’ higher possible upside, analysts clearly believe Penntex Midstream Partners is more favorable than Western Refining Logistics.

Western Refining Logistics Company Profile

Western Refining Logistics, LP owns, operates, develops, and acquires logistics and related assets and businesses to include terminals, storage tanks, pipelines and other logistics assets related to the terminaling, transportation, storage and distribution of crude oil and refined products. The Company’s segments include logistics and wholesale. The Company operates its logistics business and wholesale business under commercial and service agreements with Western Refining, Inc. (Western). Its logistics assets consist of pipeline and gathering infrastructure and terminalling, transportation and storage assets in the Southwest and the Upper Great Plains region. Its wholesale business purchases its petroleum fuels from Western, and its lubricants and additional petroleum fuels from third-party suppliers.

Penntex Midstream Partners Company Profile

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.

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