Analyzing Teekay Offshore Partners (TOO) and Williams Companies (WMB)

Teekay Offshore Partners (NYSE: TOO) and Williams Companies (NYSE:WMB) are both energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Profitability

This table compares Teekay Offshore Partners and Williams Companies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Teekay Offshore Partners -21.88% 3.91% 0.66%
Williams Companies 5.90% 3.23% 1.02%

Valuation & Earnings

This table compares Teekay Offshore Partners and Williams Companies’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Teekay Offshore Partners $1.15 billion 0.85 $32.61 million ($1.40) -1.70
Williams Companies $7.50 billion 3.38 -$424.00 million $0.57 53.86

Teekay Offshore Partners has higher earnings, but lower revenue than Williams Companies. Teekay Offshore Partners is trading at a lower price-to-earnings ratio than Williams Companies, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Teekay Offshore Partners has a beta of 2.75, indicating that its share price is 175% more volatile than the S&P 500. Comparatively, Williams Companies has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Dividends

Teekay Offshore Partners pays an annual dividend of $0.04 per share and has a dividend yield of 1.7%. Williams Companies pays an annual dividend of $1.20 per share and has a dividend yield of 3.9%. Teekay Offshore Partners pays out -2.9% of its earnings in the form of a dividend. Williams Companies pays out 210.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

18.2% of Teekay Offshore Partners shares are held by institutional investors. Comparatively, 84.9% of Williams Companies shares are held by institutional investors. 0.5% of Williams Companies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Teekay Offshore Partners and Williams Companies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Teekay Offshore Partners 1 1 3 0 2.40
Williams Companies 0 3 10 1 2.86

Teekay Offshore Partners presently has a consensus target price of $4.67, indicating a potential upside of 96.08%. Williams Companies has a consensus target price of $34.90, indicating a potential upside of 13.68%. Given Teekay Offshore Partners’ higher possible upside, research analysts clearly believe Teekay Offshore Partners is more favorable than Williams Companies.

Summary

Williams Companies beats Teekay Offshore Partners on 12 of the 17 factors compared between the two stocks.

Teekay Offshore Partners Company Profile

Teekay Offshore Partners L.P. is a provider of marine transportation, oil production, storage, long-distance towing and offshore installation and maintenance and safety services to the offshore oil industry in North Sea, Brazil and the East Coast of Canada. The Company operates shuttle tankers; towage vessels; floating, production, storage and off-loading (FPSO) units; floating storage and off-take (FSO) units; units for maintenance and safety (UMS); long-distance towing and offshore installation vessels, and conventional crude oil tankers. Its segments include shuttle tanker segment, FPSO segment, FSO segment, conventional tanker segment, towage segment and UMS segment. Its fleet consists of over 30 shuttle tankers, such as over three chartered-in vessels and a HiLoad Dynamic Positioning unit, over six FPSO units, approximately seven FSO units, over six long-distance towing and offshore installation vessels, a UMS and over two conventional oil tankers.

Williams Companies Company Profile

The Williams Companies, Inc. is an energy infrastructure company. The Company is focused on connecting North America’s hydrocarbon resource plays to markets for natural gas, natural gas liquids (NGL), and olefins. As of December 31, 2016, its interstate gas pipelines, midstream and olefins production interests were held through its investment in Williams Partners L.P. (WPZ). The Company’s segments include Williams Partners, Williams NGL & Petchem Services and Other. The Williams Partners segment includes its consolidated master limited partnership, WPZ. The gas pipeline business includes interstate natural gas pipelines and pipeline joint project investments. The midstream business provides natural gas gathering, treating, processing and compression services. The Williams NGL & Petchem Services segment includes its Texas Belle pipeline and certain other domestic olefins pipeline assets. Other segment includes its corporate operations and Canadian construction services company.

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