Head to Head Comparison: Tallgrass Energy Partners (TEP) versus Rice Midstream Partners (RMP)

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Tallgrass Energy Partners (NYSE: RMP) and Rice Midstream Partners (NYSE:RMP) are both oils/energy companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, institutional ownership, earnings and dividends.

Insider & Institutional Ownership

57.0% of Tallgrass Energy Partners shares are owned by institutional investors. Comparatively, 74.1% of Rice Midstream Partners shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Tallgrass Energy Partners pays an annual dividend of $3.90 per share and has a dividend yield of 9.0%. Rice Midstream Partners pays an annual dividend of $1.22 per share and has a dividend yield of 6.8%. Tallgrass Energy Partners pays out 103.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy Partners has increased its dividend for 4 consecutive years and Rice Midstream Partners 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 Recommendations

This is a summary of current ratings and target prices for Tallgrass Energy Partners and Rice Midstream Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tallgrass Energy Partners 0 7 3 0 2.30
Rice Midstream Partners 0 9 3 0 2.25

Tallgrass Energy Partners presently has a consensus price target of $44.29, suggesting a potential upside of 2.25%. Rice Midstream Partners has a consensus price target of $21.80, suggesting a potential upside of 20.78%. Given Rice Midstream Partners’ higher probable upside, analysts plainly believe Rice Midstream Partners is more favorable than Tallgrass Energy Partners.

Risk and Volatility

Tallgrass Energy Partners has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, Rice Midstream Partners has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500.

Earnings and Valuation

This table compares Tallgrass Energy Partners and Rice Midstream Partners’ 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 4.83 $433.99 million $3.77 11.49
Rice Midstream Partners $294.69 million 6.27 $177.97 million N/A N/A

Tallgrass Energy Partners has higher revenue and earnings than Rice Midstream Partners.

Profitability

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

Net Margins Return on Equity Return on Assets
Tallgrass Energy Partners 68.20% 30.04% 11.69%
Rice Midstream Partners 59.40% 10.01% 8.61%

Summary

Tallgrass Energy Partners beats Rice Midstream Partners on 8 of the 13 factors compared between the two stocks.

About Tallgrass Energy Partners

Tallgrass Energy Partners, LP acquires, owns, develops, and operates midstream energy assets in North America. It operates through Natural Gas Transportation; Crude Oil Transportation; and Gathering, Processing & Terminalling segments. The Natural Gas Transportation segment engages in the ownership and operation of interstate natural gas pipelines and integrated natural gas storage facilities with approximately 4,641 miles of transportation pipelines in Wyoming, Colorado, Kansas, Missouri, and Nebraska. This segment provides its services to on-system customers, including third-party local distribution companies, industrial users, and other shippers. The Crude Oil Transportation segment engages in the ownership and operation of the Pony Express System, a crude oil pipeline serving the Bakken Shale, Denver-Julesburg, and Powder River Basins, as well as other nearby oil producing basins. The Gathering, Processing & Terminalling segment owns and operates natural gas gathering and processing facilities that produce natural gas liquids (NGLs) and residue gas for sale in local wholesale markets or delivers into pipelines for transportation to additional end markets; and crude oil gathering, storage, and terminalling facilities, as well as engages in the transportation of NGLs, and marketing of crude oil and NGLs. This segment also provides water business services primarily to the oil and gas exploration and production industry. The company was founded in 2013 and is based in Leawood, Kansas. Tallgrass Energy Partners, LP operates as a subsidiary of Tallgrass Energy GP, LP.

About Rice Midstream Partners

Rice Midstream Partners LP owns, operates, develops, and acquires midstream assets in the Appalachian Basin. It operates in two segments, Gathering and Compression, and Water Services. Its natural gas gathering and compression assets consist of natural gas gathering and compression systems that serve producers in the dry gas core of the Marcellus Shale in southwestern Pennsylvania. The company also provides water services to support well completion activities, as well as to collect and recycle or dispose of flowback and produced water in Washington and Greene counties, Pennsylvania; and Belmont County, Ohio. Rice Midstream Management LLC serves as the general partner of Rice Midstream Partners LP. The company was founded in 2014 and is headquartered in Pittsburgh, Pennsylvania.

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