Critical Survey: Tallgrass Energy (TGE) vs. American Midstream Partners (AMID)

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Tallgrass Energy (NYSE: AMID) and American Midstream Partners (NYSE:AMID) are both oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitability, dividends and earnings.

Risk and Volatility

Tallgrass Energy has a beta of 1.9, suggesting that its stock price is 90% more volatile than the S&P 500. Comparatively, American Midstream Partners has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings and price targets for Tallgrass Energy and American Midstream Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tallgrass Energy 0 2 1 0 2.33
American Midstream Partners 0 3 0 0 2.00

Tallgrass Energy presently has a consensus target price of $26.00, indicating a potential upside of 1.56%. American Midstream Partners has a consensus target price of $13.67, indicating a potential upside of 113.54%. Given American Midstream Partners’ higher possible upside, analysts clearly believe American Midstream Partners is more favorable than Tallgrass Energy.

Valuation & Earnings

This table compares Tallgrass Energy and American Midstream Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tallgrass Energy $655.90 million 6.05 -$128.72 million $0.76 33.68
American Midstream Partners $655.98 million 0.71 -$222.97 million N/A N/A

Tallgrass Energy has higher earnings, but lower revenue than American Midstream Partners.

Institutional and Insider Ownership

39.4% of Tallgrass Energy shares are held by institutional investors. Comparatively, 42.9% of American Midstream Partners shares are held by institutional investors. 5.4% of American Midstream Partners shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Tallgrass Energy -18.21% 2.03% 0.87%
American Midstream Partners -13.56% -57.25% -7.62%

Dividends

Tallgrass Energy pays an annual dividend of $1.99 per share and has a dividend yield of 7.8%. American Midstream Partners pays an annual dividend of $1.65 per share and has a dividend yield of 25.8%. Tallgrass Energy pays out 261.8% 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 Company Profile

Tallgrass Energy, LP, through its interests in Tallgrass Equity, LLC, provides crude oil transportation services to customers in Wyoming, Colorado, and the surrounding regions of the United States. The company operates through three segments: Natural Gas Transportation; Crude Oil Transportation; and Gathering, Processing & Terminalling. It also provides natural gas transportation and storage services for customers in the Rocky Mountain, Midwest, and Appalachian regions; natural gas and crude oil gathering and processing services for customers in Wyoming; and natural gas liquids (NGLs) transportation services in Northeast Colorado and Wyoming. In addition, the company offers water business services, including freshwater transportation, and produced water gathering and disposal in Colorado, Texas, and Wyoming; crude oil storage and terminalling services in Colorado; and marketing services for NGLs and crude oil. The company was formerly known as Tallgrass Energy GP, LP and changed its name to Tallgrass Energy, LP in June 2018. Tallgrass Energy, LP was founded in 2013 and is based in Leawood, Kansas.

American Midstream Partners Company Profile

American Midstream Partners, LP provides midstream infrastructure that links the producers of natural gas, crude oil, natural gas liquids (NGLs), condensate, and specialty chemicals to various intermediate and end-use markets in the United States and Mexico. Its Gas Gathering and Processing Services segment offers services to producers of natural gas and crude oil, including transporting raw natural gas and crude oil from various receipt points through gathering systems, treating the raw natural gas, processing raw natural gas to separate the NGLs from the natural gas, fractionating NGLs, and selling or delivering pipeline-quality natural gas and NGLs. The company's Liquid Pipelines and Services segment transports, purchases, and sells crude oil. Its Natural Gas Transportation Services segment transports and delivers natural gas from producing wells, receipt points, or pipeline interconnects for shippers, local distribution companies, and utilities, as well as industrial, commercial, and power generation customers. The company's Offshore Pipelines and Services segment gathers and transports natural gas from receipt points to other pipeline interconnects, onshore facilities, and other delivery points. Its Terminalling Services segment provides petroleum products, distillates, chemicals, and agricultural products storage services at its marine terminals for commodity brokers, refiners, and chemical manufacturers. As of May 10, 2018, the company owned approximately 5,100 miles of interstate and intrastate pipelines; gas processing plants and fractionation facilities; an offshore semisubmersible floating production system with nameplate processing capacity of 90 thousand barrels per day of crude oil and 220 million cubic feet per day of natural gas; and terminal sites with approximately 6.7 million barrels of storage capacity. American Midstream GP, LLC serves as the general partner of the company. The company was founded in 2009 and is headquartered in Houston, Texas.

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