Halliburton (HAL) and SemGroup (SEMG) Critical Survey

Halliburton (NYSE: HAL) and SemGroup (NYSE:SEMG) are both oils/energy companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, institutional ownership and profitability.

Institutional & Insider Ownership

79.5% of Halliburton shares are held by institutional investors. 0.5% of Halliburton shares are held by company insiders. Comparatively, 0.8% of SemGroup shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Halliburton pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. SemGroup pays an annual dividend of $1.89 per share and has a dividend yield of 7.5%. Halliburton pays out 59.0% of its earnings in the form of a dividend. SemGroup pays out -787.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. SemGroup is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings for Halliburton and SemGroup, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Halliburton 0 3 20 0 2.87
SemGroup 0 8 3 0 2.27

Halliburton presently has a consensus target price of $59.29, indicating a potential upside of 30.76%. SemGroup has a consensus target price of $26.58, indicating a potential upside of 5.05%. Given Halliburton’s stronger consensus rating and higher probable upside, analysts clearly believe Halliburton is more favorable than SemGroup.

Risk and Volatility

Halliburton has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, SemGroup has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500.

Valuation and Earnings

This table compares Halliburton and SemGroup’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Halliburton $20.62 billion 1.93 -$463.00 million $1.22 37.16
SemGroup $2.08 billion 0.96 -$17.15 million ($0.24) -105.42

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

Profitability

This table compares Halliburton and SemGroup’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Halliburton -1.74% 15.87% 5.47%
SemGroup -1.74% 2.17% 0.72%

Summary

Halliburton beats SemGroup on 10 of the 15 factors compared between the two stocks.

Halliburton Company Profile

Halliburton Company provides a range of services and products to oil and natural gas companies worldwide. The company's Completion and Production segment offers production enhancement services, including stimulation and sand control services; and cementing services, such as bonding the well, well casing, and casing equipment. It also provides completion tools that offer downhole solutions and services, including well completion products and services, intelligent well completions, liner hanger systems, sand control systems, and service tools; production solutions comprising coiled tubing, hydraulic workover units, and downhole tools; and pipeline and process services, such as pre-commissioning, commissioning, maintenance, and decommissioning. In addition, this segment offers oilfield production and completion chemicals and services; and electrical submersible pumps and progressive cavity pumps, as well as artificial lift services to enhance reservoir and wellbore recovery. The company's Drilling and Evaluation segment provides drilling fluid systems, performance additives, completion fluids, solids control, specialized testing equipment, and waste management services; and drilling systems and services. It also offers wireline and perforating services, including open-hole logging, and cased-hole and slickline; and drill bits and services comprising roller cone rock bits, fixed cutter bits, hole enlargement, and related downhole tools and services, as well as coring equipment and services. In addition, this segment provides integrated exploration, drilling, and production software, as well as related professional and data management services; testing and subsea services, such as acquisition and analysis of reservoir information and optimization solutions; and project management, consulting, integrated asset management, and well control and prevention services. Halliburton Company was founded in 1919 and is based in Houston, Texas.

SemGroup Company Profile

SemGroup Corporation provides gathering, transportation, storage, distribution, marketing, and other midstream services for producers, refiners of petroleum products, and other market participants. Its Crude Transportation segment operates crude oil pipelines and truck transportation businesses. It operates a 455-mile crude oil gathering and transportation pipeline system in Kansas and northern Oklahoma; a 75-mile crude oil gathering pipeline system that transports crude oil from production facilities in the DJ Basin to the pipeline owned by White Cliffs Pipeline, L.L.C.; a 527-mile pipeline that transports crude oil from Platteville, Colorado to Cushing, Oklahoma; and 3 pipelines with an aggregate of 106 miles of pipe, as well as crude oil trucking fleet of 215 transport trucks and 210 trailers. The company's Crude Facilities segment operates crude oil storage and terminal businesses. It has 7.6 million barrels of crude oil storage capacity in Cushing, Oklahoma; and a 30-lane crude oil truck unloading facility with 350,000 barrels of storage capacity in Platteville, Colorado. Its Crude Supply and Logistics segment operates a crude oil marketing business. It has approximately 61,800 barrels of crude oil storage capacity in Trenton and Stanley. The company's HFOTCO segment stores, blends, and transports refinery products and refinery feedstocks through pipeline, barge, rail, truck, and ship. It operates a residual fuel oil storage terminal in Gulf Coast of the United States. Its SemGas segment provides natural gas gathering, processing, and marketing services. It operates 660 miles of low pressure and 140 miles of high pressure gathering lines in Oklahoma; and a 53-mile high pressure gathering pipeline located in the STACK play. Its SemCAMS segment owns and operates natural gas processing and gathering facilities with 600 miles of natural gas gathering and transportation pipelines in Alberta. The company was founded in 2000 and is headquartered in Tulsa, Oklahoma.

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