Reviewing Targa Resources (TRGP) and Delek Logistics Partners (DKL)

Targa Resources (NYSE: TRGP) and Delek Logistics Partners (NYSE:DKL) are both oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, valuation, profitability, earnings and institutional ownership.

Profitability

This table compares Targa Resources and Delek Logistics Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Targa Resources -4.68% -0.52% -0.24%
Delek Logistics Partners 12.86% -332.86% 15.79%

Insider & Institutional Ownership

87.3% of Targa Resources shares are owned by institutional investors. Comparatively, 25.0% of Delek Logistics Partners shares are owned by institutional investors. 1.9% of Targa Resources shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

Targa Resources has a beta of 2.07, suggesting that its stock price is 107% more volatile than the S&P 500. Comparatively, Delek Logistics Partners has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for Targa Resources and Delek Logistics Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Targa Resources 0 7 10 1 2.67
Delek Logistics Partners 1 1 0 0 1.50

Targa Resources presently has a consensus price target of $55.12, indicating a potential upside of 16.36%. Delek Logistics Partners has a consensus price target of $32.50, indicating a potential upside of 0.65%. Given Targa Resources’ stronger consensus rating and higher possible upside, research analysts plainly believe Targa Resources is more favorable than Delek Logistics Partners.

Dividends

Targa Resources pays an annual dividend of $3.64 per share and has a dividend yield of 7.7%. Delek Logistics Partners pays an annual dividend of $2.90 per share and has a dividend yield of 9.0%. Targa Resources pays out -136.8% of its earnings in the form of a dividend. Delek Logistics Partners pays out 145.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Targa Resources has increased its dividend for 4 consecutive years.

Earnings & Valuation

This table compares Targa Resources and Delek Logistics Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Targa Resources $6.69 billion 1.53 -$187.30 million ($2.66) -17.81
Delek Logistics Partners $448.06 million 1.79 $62.80 million $1.99 16.23

Delek Logistics Partners has lower revenue, but higher earnings than Targa Resources. Targa Resources is trading at a lower price-to-earnings ratio than Delek Logistics Partners, indicating that it is currently the more affordable of the two stocks.

Summary

Targa Resources beats Delek Logistics Partners on 11 of the 18 factors compared between the two stocks.

Targa Resources Company Profile

Targa Resources Corp. is a midstream energy company in North America. It provides midstream services. Its segments include Gathering and Processing, and Logistics and Marketing (Downstream Business). It is engaged in the business of gathering, compressing, treating, processing and selling natural gas; storing, fractionating, treating, transporting and selling natural gas liquids (NGLs) and NGL products, including services to liquefied petroleum gas exporters; gathering, storing and terminalling crude oil, and storing, terminalling and selling refined petroleum products. The Gathering and Processing segment consists of gathering, compressing, dehydrating, treating, conditioning, processing, and marketing natural gas and gathering crude oil. The Logistics and Marketing segment includes all the activities necessary to convert mixed NGLs into NGL products and provides certain services, such as storing, fractionating, terminalling, transporting and marketing of NGLs and NGL products.

Delek Logistics Partners Company Profile

Delek Logistics Partners, LP owns and operates logistics and marketing assets for crude oil, and intermediate and refined products. The Company’s business primarily consists of certain crude oil, intermediate and refined products pipelines and transportation, storage, wholesale marketing, terminaling and offloading assets, which were previously owned, operated or held by Delek US Holdings, Inc. (Delek), and assets acquired from unrelated third parties. The Company operates through two segments: Pipelines and Transportation segment, and Wholesale Marketing and Terminalling segment. The Company engaged in the gathering, transporting and storing crude oil; storing intermediate products and feed stocks, and marketing, distributing, transporting, offloading and storing refined products. The Company also provides crude oil, intermediate and refined products transportation services for terminaling, and marketing services to third parties primarily in Texas, Tennessee and Arkansas.

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