Summit Midstream Partners (SMLP) & Enbridge Energy Management (EEQ) Critical Survey

Summit Midstream Partners (NYSE: SMLP) and Enbridge Energy Management (NYSE:EEQ) are both small-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.

Dividends

Summit Midstream Partners pays an annual dividend of $2.30 per share and has a dividend yield of 10.2%. Enbridge Energy Management pays an annual dividend of $0.55 per share and has a dividend yield of 3.9%. Summit Midstream Partners pays out 157.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Enbridge Energy Management pays out -704.5% of its earnings in the form of a dividend. Summit Midstream Partners has increased its dividend for 4 consecutive years. Summit Midstream Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Summit Midstream Partners and Enbridge Energy Management’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Summit Midstream Partners $402.36 million 4.17 -$40.91 million $1.46 15.41
Enbridge Energy Management N/A N/A -$120.10 million ($0.08) -182.78

Summit Midstream Partners has higher revenue and earnings than Enbridge Energy Management. Enbridge Energy Management is trading at a lower price-to-earnings ratio than Summit Midstream Partners, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Summit Midstream Partners and Enbridge Energy Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Summit Midstream Partners 24.14% 11.61% 4.31%
Enbridge Energy Management N/A -800.00% -800.00%

Risk and Volatility

Summit Midstream Partners has a beta of 1.66, meaning that its stock price is 66% more volatile than the S&P 500. Comparatively, Enbridge Energy Management has a beta of 1.2, meaning that its stock price is 20% more volatile than the S&P 500.

Institutional and Insider Ownership

48.8% of Summit Midstream Partners shares are owned by institutional investors. Comparatively, 74.6% of Enbridge Energy Management shares are owned by institutional investors. 0.3% of Enbridge Energy Management shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for Summit Midstream Partners and Enbridge Energy Management, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Summit Midstream Partners 1 1 3 0 2.40
Enbridge Energy Management 1 1 0 0 1.50

Summit Midstream Partners presently has a consensus price target of $25.00, indicating a potential upside of 11.11%. Enbridge Energy Management has a consensus price target of $18.00, indicating a potential upside of 26.14%. Given Enbridge Energy Management’s higher probable upside, analysts clearly believe Enbridge Energy Management is more favorable than Summit Midstream Partners.

Summary

Summit Midstream Partners beats Enbridge Energy Management on 11 of the 15 factors compared between the two stocks.

Summit Midstream Partners Company Profile

Summit Midstream Partners, LP focuses on developing, owning and operating midstream energy infrastructure assets. The Company’s segments include the Utica Shale, which includes its ownership interest in Ohio Gathering, as well as Summit Utica; the Williston Basin, which includes Bison Midstream, Polar and Divide and Tioga Midstream; the Marcellus Shale, which includes Mountaineer Midstream; the Barnett Shale, which includes DFW Midstream Services LLC (DFW Midstream), and the Piceance Basin /DJ Basins, which includes Grand River and Niobrara G&P. The Company’s assets are located in the producing areas of unconventional resource basins, primarily shale formations, in the continental United States. It provides natural gas gathering, treating and processing services, as well as crude oil and produced water gathering services pursuant to long-term and fee-based agreements with its customers.

Enbridge Energy Management Company Profile

Enbridge Energy Management, L.L.C. is a limited partner of Enbridge Energy Partners, L.P. (the Partnership). The Company owns i-units, a special class of the Partnership’s limited partner interests. The Company manages the business of the Partnership. The Partnership owns and operates crude oil and liquid petroleum transportation and storage assets, and natural gas gathering, treating, processing, transportation and marketing assets in the United States.

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