Head-To-Head Survey: Phillips 66 (NYSE:PSX) vs. NGL Energy Partners (NGL)

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

Risk and Volatility

NGL Energy Partners has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500. Comparatively, Phillips 66 has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Profitability

This table compares NGL Energy Partners and Phillips 66’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NGL Energy Partners -0.97% -1.80% -0.57%
Phillips 66 4.88% 9.52% 4.36%

Institutional & Insider Ownership

70.5% of NGL Energy Partners shares are owned by institutional investors. Comparatively, 71.1% of Phillips 66 shares are owned by institutional investors. 0.5% of Phillips 66 shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for NGL Energy Partners and Phillips 66, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NGL Energy Partners 0 2 2 0 2.50
Phillips 66 2 7 6 0 2.27

NGL Energy Partners presently has a consensus price target of $15.75, indicating a potential upside of 21.62%. Phillips 66 has a consensus price target of $102.47, indicating a potential upside of 9.41%. Given NGL Energy Partners’ stronger consensus rating and higher possible upside, equities research analysts plainly believe NGL Energy Partners is more favorable than Phillips 66.

Valuation & Earnings

This table compares NGL Energy Partners and Phillips 66’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NGL Energy Partners $13.02 billion 0.12 $136.81 million ($1.71) -7.56
Phillips 66 $104.62 billion 0.45 $5.11 billion $3.97 23.59

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

Dividends

NGL Energy Partners pays an annual dividend of $1.56 per share and has a dividend yield of 12.1%. Phillips 66 pays an annual dividend of $2.80 per share and has a dividend yield of 3.0%. NGL Energy Partners pays out -91.2% of its earnings in the form of a dividend. Phillips 66 pays out 70.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. NGL Energy Partners has raised its dividend for 6 consecutive years. NGL Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Phillips 66 beats NGL Energy Partners on 12 of the 17 factors compared between the two stocks.

NGL Energy Partners Company Profile

NGL Energy Partners LP owns and operates a vertically integrated energy business. The Company’s segments are crude oil logistics, water solutions, liquids, retail propane, refined products and renewables, and corporate and other. Its crude oil logistics segment includes owned and leased crude oil storage terminals, and owned and leased pipeline injection stations. Its water solutions segment provides services for the treatment and disposal of wastewater generated from crude oil and natural gas production, and for the disposal of solids, such as tank bottoms and drilling fluids. Its liquids segment supplies natural gas liquids to retailers, wholesalers, refiners and petrochemical plants throughout the United States and in Canada. Its retail propane segment consists of the retail marketing, and sale and distribution of propane and distillates, among others. The Company’s refined products and renewables segment is engaged in gasoline, diesel, ethanol and biodiesel marketing operations.

Phillips 66 Company Profile

Phillips 66 is an energy manufacturing and logistics company with midstream, chemicals, refining, and marketing and specialties businesses. The Company operates through four segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment gathers, processes, transports and markets natural gas, and transports, stores, fractionates and markets natural gas liquids (NGLs) in the United States. The Chemicals segment consists of its equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics. The Refining segment buys, sells and refines crude oil and other feedstocks at refineries in the United States and Europe. The M&S segment purchases for resale and markets refined petroleum products, such as gasolines, distillates and aviation fuels, primarily in the United States and Europe, as well as includes the manufacturing and marketing of specialty products, and power generation operations.

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