Critical Contrast: NuStar Energy (NS) versus Its Rivals

NuStar Energy (NYSE: NS) is one of 21 public companies in the “Pipelines, except natural gas” industry, but how does it contrast to its peers? We will compare NuStar Energy to similar businesses based on the strength of its valuation, dividends, institutional ownership, earnings, risk, profitability and analyst recommendations.

Analyst Ratings

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This is a summary of recent ratings and target prices for NuStar Energy and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NuStar Energy 0 11 0 0 2.00
NuStar Energy Competitors 218 964 1029 28 2.39

NuStar Energy presently has a consensus price target of $32.25, suggesting a potential upside of 61.90%. As a group, “Pipelines, except natural gas” companies have a potential upside of 28.94%. Given NuStar Energy’s higher probable upside, research analysts clearly believe NuStar Energy is more favorable than its peers.

Insider and Institutional Ownership

60.1% of NuStar Energy shares are owned by institutional investors. Comparatively, 56.5% of shares of all “Pipelines, except natural gas” companies are owned by institutional investors. 4.1% of NuStar Energy shares are owned by company insiders. Comparatively, 8.6% of shares of all “Pipelines, except natural gas” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares NuStar Energy and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NuStar Energy 8.16% 7.82% 2.44%
NuStar Energy Competitors 31.87% -1.27% 9.40%

Volatility & Risk

NuStar Energy has a beta of 1.46, suggesting that its share price is 46% more volatile than the S&P 500. Comparatively, NuStar Energy’s peers have a beta of 1.07, suggesting that their average share price is 7% more volatile than the S&P 500.

Dividends

NuStar Energy pays an annual dividend of $4.38 per share and has a dividend yield of 22.0%. NuStar Energy pays out 684.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Pipelines, except natural gas” companies pay a dividend yield of 8.4% and pay out 134.2% of their earnings in the form of a dividend.

Valuation and Earnings

This table compares NuStar Energy and its peers top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
NuStar Energy $1.81 billion $147.96 million 31.13
NuStar Energy Competitors $6.57 billion $435.72 million 17.74

NuStar Energy’s peers have higher revenue and earnings than NuStar Energy. NuStar Energy is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Summary

NuStar Energy peers beat NuStar Energy on 9 of the 15 factors compared.

NuStar Energy Company Profile

NuStar Energy L.P. is engaged in the transportation of petroleum products and anhydrous ammonia; the terminalling and storage of petroleum products, and the marketing of petroleum products. The Company’s segments include pipeline, storage and fuels marketing. The pipeline segment consists of the transportation of refined petroleum products, crude oil and anhydrous ammonia. The storage segment consists of facilities that provide storage, handling and other services for petroleum products, crude oil, specialty chemicals and other liquids. The fuels marketing segment involve the purchase of crude oil, fuel oil, bunker fuel, fuel oil blending components and other refined products for resale. It conducts its operations through its subsidiaries, primarily NuStar Logistics, L.P. and NuStar Pipeline Operating Partnership L.P. As of May 4, 2017, it had more than 9,200 miles of pipeline and 81 terminal and storage facilities that provide approximately 96 million barrels of storage capacity.

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