Critical Analysis: EQT GP (EQGP) versus Athlon Energy (ATHL)

EQT GP (NYSE: EQGP) and Athlon Energy (NYSE:ATHL) are both mid-cap oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, dividends and risk.

Institutional and Insider Ownership

10.2% of EQT GP shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares EQT GP and Athlon Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
EQT GP $735.61 million 9.98 $234.17 million $0.94 29.33
Athlon Energy N/A N/A N/A $0.57 102.61

EQT GP has higher revenue and earnings than Athlon Energy. EQT GP is trading at a lower price-to-earnings ratio than Athlon Energy, indicating that it is currently the more affordable of the two stocks.

Dividends

EQT GP pays an annual dividend of $0.91 per share and has a dividend yield of 3.3%. Athlon Energy does not pay a dividend. EQT GP pays out 96.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Athlon Energy has raised its dividend for 2 consecutive years.

Profitability

This table compares EQT GP and Athlon Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
EQT GP 30.98% 12.14% 7.78%
Athlon Energy N/A N/A N/A

Analyst Ratings

This is a summary of current ratings and target prices for EQT GP and Athlon Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EQT GP 0 4 7 0 2.64
Athlon Energy 0 0 0 0 N/A

EQT GP currently has a consensus price target of $32.22, indicating a potential upside of 16.87%. Given EQT GP’s higher possible upside, research analysts plainly believe EQT GP is more favorable than Athlon Energy.

Summary

EQT GP beats Athlon Energy on 9 of the 12 factors compared between the two stocks.

EQT GP Company Profile

EQT GP Holdings, LP (EQGP) is a limited partnership company and subsidiary of EQT Gathering Holdings, LLC (EQT Gathering Holdings). The Company was formed to own EQT Corporation’s (EQT’s) partnership interests in EQT Midstream Partners, LP (EQM), a limited partnership formed by EQT to own, operate, acquire and develop midstream assets in the Appalachian Basin. Its segments include Gathering, and Transmission. The Gathering segment primarily includes high pressure gathering lines and the Federal Energy Regulatory Commission (FERC)-regulated low pressure gathering system. The Transmission segment includes EQM’s FERC-regulated interstate pipeline and storage business. EQGP has no independent operations. It has partnership interests in EQM. As of December 31, 2016, EQM provided midstream services to EQT and various third parties across 24 counties in Pennsylvania, West Virginia and Ohio through its two primary assets: the gathering system, and the transmission and storage system.

Athlon Energy Company Profile

Athlon Energy Inc., is an independent exploration and production company. The Company is a holding company and its sole assets are controlling equity interests in Athlon Holdings LP and its subsidiaries. The Company is focused on the acquisition, development and exploitation of unconventional oil and liquids-rich natural gas reserves in the Permian Basin. The Permian Basin spans portions of Texas and New Mexico and consists of three primary sub-basins: the Delaware Basin, the Central Basin Platform and the Midland Basin. The Company’s properties are located in the Midland Basin. In February 2014, Athlon Energy Inc announced that subsidiary, Athlon Holdings LP completed the acquisition of certain oil and natural gas properties and related assets in the Midland Basin of West Texas.

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