Analyzing Ferrellgas Partners (FGP) and Fairmount Santrol (NYSE:FMSA)

Fairmount Santrol (NYSE: FMSA) and Ferrellgas Partners (NYSE:FGP) are both small-cap industrial products companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, dividends, valuation and analyst recommendations.

Risk and Volatility

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Fairmount Santrol has a beta of 2.17, indicating that its stock price is 117% more volatile than the S&P 500. Comparatively, Ferrellgas Partners has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Profitability

This table compares Fairmount Santrol and Ferrellgas Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fairmount Santrol 5.60% 20.31% 4.52%
Ferrellgas Partners -4.54% N/A -2.98%

Earnings and Valuation

This table compares Fairmount Santrol and Ferrellgas Partners’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fairmount Santrol $959.79 million 1.07 $53.78 million $0.24 19.00
Ferrellgas Partners $1.93 billion 0.16 -$54.20 million ($0.55) -5.87

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Fairmount Santrol and Ferrellgas Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fairmount Santrol 1 10 10 0 2.43
Ferrellgas Partners 1 2 0 0 1.67

Fairmount Santrol currently has a consensus price target of $5.95, indicating a potential upside of 30.42%. Ferrellgas Partners has a consensus price target of $5.00, indicating a potential upside of 54.80%. Given Ferrellgas Partners’ higher possible upside, analysts clearly believe Ferrellgas Partners is more favorable than Fairmount Santrol.

Insider and Institutional Ownership

74.7% of Fairmount Santrol shares are owned by institutional investors. Comparatively, 5.6% of Ferrellgas Partners shares are owned by institutional investors. 9.8% of Fairmount Santrol shares are owned by company insiders. Comparatively, 0.5% of Ferrellgas Partners shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Ferrellgas Partners pays an annual dividend of $0.40 per share and has a dividend yield of 12.4%. Fairmount Santrol does not pay a dividend. Ferrellgas Partners pays out -72.7% of its earnings in the form of a dividend.

Summary

Fairmount Santrol beats Ferrellgas Partners on 12 of the 16 factors compared between the two stocks.

About Fairmount Santrol

Fairmount Santrol Holdings Inc. is a provider of sand-based proppant solutions. The Company operates through two segments: Proppant Solutions, and Industrial & Recreational (I&R) Products. Its Proppant Solutions segment provides sand-based proppants for use in hydraulic fracturing operations throughout the United States and Canada, Argentina, Mexico, China, northern Europe and the United Arab Emirates. Its I&R segment provides raw, coated, and custom blended sands to the foundry, building products, glass, turf and landscape, and filtration industries in North America. Its asset base includes approximately 800 million tons of proven and probable mineral reserves. As of March 2017, the Company had 10 sand processing facilities with 16.8 million tons of annual sand processing capacity. Its coating facilities include operations in Mexico, Denmark and China, through which it serves international oil and gas markets.

About Ferrellgas Partners

Ferrellgas Partners, L.P. distributes and sells propane and related equipment and supplies primarily in the United States. It operates in two segments: Propane Operations and Related Equipment Sales, and Midstream Operations. The company transports propane to propane distribution locations, tanks on customers' premises, or to portable propane tanks delivered to retailers. It conducts its portable tank exchange operations under the Blue Rhino brand name through a network of independent and partnership-owned distribution outlets. The company's propane is primarily used for space heating, water heating, cooking, outdoor cooking using gas grills, crop drying, irrigation, weed control, and other propane fueled appliances; as an engine fuel for combustion engine vehicles and forklifts; and as a heating or energy source in manufacturing and drying processes. It serves residential, industrial/commercial, portable tank exchange, agricultural, wholesale, and other customers in 50 States, the District of Columbia, and Puerto Rico. As of July 31, 2017, it operated 61 service centers and 789 propane distribution locations. The company is also involved in the sale of refined fuels; provision of common carrier services; retail sale of propane appliances and related parts and fittings, as well as other retail propane related services and consumer products; sale of gas grills, grilling tools and accessories, patio heaters, fireplace and garden accessories, mosquito traps, and other outdoor products; and treatment and disposal of salt water generated from crude oil production, as well as in the sale of crude oil. In addition, it operates salt water disposal wells in the Eagle Ford shale region of south Texas; and provides crude oil transportation and logistics services under the Bridger Logistics brand name. Ferrellgas Partners, L.P. was founded in 1939 and is headquartered in Overland Park, Kansas.

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