Analyzing Plains GP (PAGP) and Delek Logistics Partners (DKL)

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

Profitability

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

Net Margins Return on Equity Return on Assets
Plains GP -2.63% 0.70% 0.32%
Delek Logistics Partners 12.98% -144.78% 15.36%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Plains GP and Delek Logistics Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Plains GP 1 7 10 1 2.58
Delek Logistics Partners 1 2 0 0 1.67

Plains GP currently has a consensus price target of $25.81, suggesting a potential upside of 3.46%. Delek Logistics Partners has a consensus price target of $32.50, suggesting a potential upside of 11.68%. Given Delek Logistics Partners’ higher probable upside, analysts plainly believe Delek Logistics Partners is more favorable than Plains GP.

Earnings and Valuation

This table compares Plains GP and Delek Logistics Partners’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Plains GP $26.22 billion 0.15 -$731.00 million $0.65 38.38
Delek Logistics Partners $538.08 million 1.35 $69.40 million $2.09 13.92

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

Volatility & Risk

Plains GP has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500. Comparatively, Delek Logistics Partners has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Insider & Institutional Ownership

84.9% of Plains GP shares are owned by institutional investors. Comparatively, 24.6% of Delek Logistics Partners shares are owned by institutional investors. 16.8% of Plains GP shares are owned by insiders. 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.

Dividends

Plains GP pays an annual dividend of $1.20 per share and has a dividend yield of 4.8%. Delek Logistics Partners pays an annual dividend of $3.00 per share and has a dividend yield of 10.3%. Plains GP pays out 184.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Delek Logistics Partners pays out 143.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Plains GP has increased its dividend for 3 consecutive years and Delek Logistics Partners has increased its dividend for 4 consecutive years. Delek Logistics Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

About Plains GP

Plains GP Holdings, L.P. owns and operates midstream energy infrastructure in the United States and Canada. It operates through three segments: Transportation, Facilities, and Supply and Logistics. The Transportation segment engages in the transportation of crude oil and natural gas liquids (NGLs) on pipelines, gathering systems, trucks, and barges. As of December 31, 2017, this segment owned and leased assets comprising 18,700 miles of crude oil and NGL pipelines and gathering systems; 32 million barrels of above-ground tank capacity; 810 trailers; 60 transport and storage barges; and 30 transport tugs. The Facilities segment is involved in the provision of storage, terminalling, and throughput services primarily for crude oil, NGLs, and natural gas; NGL fractionation and isomerization services; and natural gas and condensate processing services. This segment owned and operated approximately 77 million barrels of crude oil storage capacity; 34 million barrels of NGL storage capacity; 67 billion cubic feet of natural gas storage capacity; 25 billion cubic feet of base gas; 9 natural gas processing plants; a condensate processing facility; 8 fractionation plants; 34 crude oil and NGL rail terminals; 5 marine facilities; and 1,000 miles of pipelines. The Supply and Logistics segment engages in merchant-related activities, including purchase of crude oil, as well as NGL from producers, refiners, processors, and other marketers; storage of NGL and natural gas; and resale and transport of crude oil and NGL. It owned 14 million barrels of crude oil and NGL linefill; 4 million barrels of crude oil and NGL linefill in pipelines owned by third parties and other inventory; 730 trucks and 900 trailers; and 10,100 crude oil and NGL railcars. The company offers logistics services, principally for crude oil, NGLs, and natural gas. PAA GP Holdings LLC operates as a general partner of the company. Plains GP Holdings, L.P. was founded in 2013 and is headquartered in Houston, Texas.

About Delek Logistics Partners

Delek Logistics Partners, LP owns and operates logistics and marketing assets for crude oil, and intermediate and refined products in the United States. It operates in two segments, Pipelines and Transportation, and Wholesale Marketing and Terminalling. The Pipelines and Transportation segment consists of assets, including pipelines and trucks, and ancillary assets that provide crude oil gathering and crude oil, intermediate and finished products transportation, and storage services primarily in support of the Tyler and El Dorado refineries, as well as offers crude oil and other products transportation services to third parties. This segment operates approximately 400 miles of crude oil transportation pipelines; 406 miles of refined product pipelines; and approximately 600 miles of crude oil gathering and trunk lines with an aggregate of approximately 7.3 million barrels of active shell capacity. The Wholesale Marketing and Terminalling segment provides wholesale marketing, transporting, storing, and terminalling services related to refined products to independent third parties. Delek Logistics GP, LLC serves as the general partner of the company. Delek Logistics Partners, LP was founded in 2012 and is headquartered in Brentwood, Tennessee.

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