Critical Comparison: Noble Midstream Partners (NYSE:NBLX) & Phillips 66 Partners (PSXP)

Noble Midstream Partners (NYSE: NBLX) and Phillips 66 Partners (NYSE:PSXP) are both oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.

Dividends

Noble Midstream Partners pays an annual dividend of $1.87 per share and has a dividend yield of 3.3%. Phillips 66 Partners pays an annual dividend of $2.71 per share and has a dividend yield of 5.3%. Noble Midstream Partners pays out 50.5% of its earnings in the form of a dividend. Phillips 66 Partners pays out 106.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Phillips 66 Partners has raised its dividend for 4 consecutive years. Phillips 66 Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Noble Midstream Partners and Phillips 66 Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Noble Midstream Partners $160.72 million 8.16 $74.44 million $3.70 15.26
Phillips 66 Partners $873.00 million 7.19 $301.00 million $2.55 20.24

Phillips 66 Partners has higher revenue and earnings than Noble Midstream Partners. Noble Midstream Partners is trading at a lower price-to-earnings ratio than Phillips 66 Partners, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

75.7% of Noble Midstream Partners shares are held by institutional investors. Comparatively, 37.2% of Phillips 66 Partners shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Noble Midstream Partners and Phillips 66 Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Noble Midstream Partners 55.83% 36.74% 24.51%
Phillips 66 Partners 42.19% 23.56% 9.55%

Risk & Volatility

Noble Midstream Partners has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, Phillips 66 Partners has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Noble Midstream Partners and Phillips 66 Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noble Midstream Partners 0 2 6 0 2.75
Phillips 66 Partners 0 5 6 0 2.55

Noble Midstream Partners currently has a consensus target price of $54.29, indicating a potential downside of 3.87%. Phillips 66 Partners has a consensus target price of $58.50, indicating a potential upside of 13.35%. Given Phillips 66 Partners’ higher possible upside, analysts clearly believe Phillips 66 Partners is more favorable than Noble Midstream Partners.

Summary

Noble Midstream Partners beats Phillips 66 Partners on 8 of the 15 factors compared between the two stocks.

About Noble Midstream Partners

Noble Midstream Partners LP is engaged in owning, operating, developing and acquiring a range of domestic midstream infrastructure assets. The Company’s areas of focus are in the area of Denver-Julesburg (DJ) Basin in Colorado and the Southern Delaware Basin position of the Permian Basin in Texas (Delaware Basin). Its segments include Gathering Systems, Fresh Water Delivery, and Investments in White Cliffs and Other. The Gathering Systems segment includes crude oil, natural gas and produced water gathering, as well as crude oil treating. It holds interest in White Cliffs Pipeline L.L.C. (the White Cliffs Interest). The Investments in White Cliffs and Other segment includes activity associated with the White Cliffs Interest. As of December 31, 2016, the White Cliffs Pipeline system consisted of two 527-mile crude oil pipelines that extended from the DJ Basin to the Cushing, Oklahoma. It provides crude oil, natural gas, and water-related midstream services for Noble Energy, Inc.

About Phillips 66 Partners

Phillips 66 Partners LP (Phillips 66) owns, operates, develops and acquires fee-based crude oil, refined petroleum product and natural gas liquids (NGL) pipelines, terminals and other transportation and midstream assets. The Company’s assets consist of systems, such as Clifton Ridge Crude System, Eagle Ford Gathering System, Ponca Crude System, Billings Crude System, Borger Crude System, Sweeny to Pasadena Products System, Hartford Connector Products System, Gold Line Products System, Cross-Channel Connector Products System, Ponca Products System, Billings Products System, Bayway Products System, Standish Pipeline, Borger Products System, River Parish NGL System, Medford Spheres, Bayway Rail Rack, Ferndale Rail Rack, Sand Hills/Southern Hills Joint Ventures, Explorer Pipeline Joint Venture, Bakken Joint Ventures, Bayou Bridge Pipeline Joint Venture, STACK Pipeline Joint Venture, and Sweeny Fractionator and Clemens Caverns.

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