Analyzing Tallgrass Energy Partners (TEP) and Tallgrass Energy GP (TEGP)

Tallgrass Energy Partners (NYSE: TEP) and Tallgrass Energy GP (NYSE:TEGP) are both mid-cap energy companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, earnings, risk, dividends and profitability.

Dividends

Tallgrass Energy Partners pays an annual dividend of $3.86 per share and has a dividend yield of 9.8%. Tallgrass Energy GP pays an annual dividend of $1.47 per share and has a dividend yield of 7.1%. Tallgrass Energy Partners pays out 99.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy GP pays out -66.2% of its earnings in the form of a dividend. Tallgrass Energy Partners has increased its dividend for 4 consecutive years and Tallgrass Energy GP has increased its dividend for 2 consecutive years. Tallgrass Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Tallgrass Energy Partners and Tallgrass Energy GP, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tallgrass Energy Partners 0 4 7 0 2.64
Tallgrass Energy GP 1 5 3 0 2.22

Tallgrass Energy Partners presently has a consensus price target of $51.13, suggesting a potential upside of 30.09%. Tallgrass Energy GP has a consensus price target of $28.56, suggesting a potential upside of 37.62%. Given Tallgrass Energy GP’s higher probable upside, analysts plainly believe Tallgrass Energy GP is more favorable than Tallgrass Energy Partners.

Earnings & Valuation

This table compares Tallgrass Energy Partners and Tallgrass Energy GP’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tallgrass Energy Partners $655.90 million 4.39 $433.99 million $3.89 10.10
Tallgrass Energy GP $655.90 million 5.85 -$128.72 million ($2.22) -9.35

Tallgrass Energy GP is trading at a lower price-to-earnings ratio than Tallgrass Energy Partners, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

62.1% of Tallgrass Energy Partners shares are owned by institutional investors. Comparatively, 35.8% of Tallgrass Energy GP shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Tallgrass Energy Partners 66.17% 28.25% 11.21%
Tallgrass Energy GP -19.63% 2.43% 1.04%

Summary

Tallgrass Energy Partners beats Tallgrass Energy GP on 11 of the 14 factors compared between the two stocks.

About Tallgrass Energy Partners

Tallgrass Energy Partners, LP owns, operates, acquires and develops midstream energy assets in North America. The Company operates through three segments: Crude Oil Transportation & Logistics, Natural Gas Transportation & Logistics and Processing & Logistics. The Crude Oil Transportation & Logistics segment includes the ownership and operation of a Federal Energy Regulatory Commission (FERC) crude oil pipeline system, and crude oil storage and terminaling facilities. The Natural Gas Transportation & Logistics segment is engaged in the ownership and operation of FERC regulated interstate natural gas pipelines and integrated natural gas storage facilities. The Processing & Logistics segment is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities; the provision of water business services primarily to the oil and gas exploration and production industry, and the transportation of natural gas liquids (NGLs).

About Tallgrass Energy GP

Tallgrass Energy GP, LP is a limited partnership company, which includes the operations of Tallgrass Equity, LLC (Tallgrass Equity), Tallgrass MLP GP, LLC, Tallgrass Energy Partners, LP (TEP), and TEP’s subsidiaries. TEP owns, operates, acquires and develops midstream energy assets in North America. TEP’s segments include Crude Oil Transportation & Logistics, which is engaged in the ownership and operation of a crude oil pipeline system, and crude oil storage and terminaling facilities; Natural Gas Transportation & Logistics, which is engaged in the ownership and operation of interstate natural gas pipelines and integrated natural gas storage facilities; Processing & Logistics, which is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities, and the provision of water business services to the oil and gas exploration and production industry, and Corporate and Other.

Receive News & Ratings for Tallgrass Energy Partners Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Tallgrass Energy Partners and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply