Contrasting USA Compression Partners (USAC) & Western Gas Partners (WES)

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USA Compression Partners (NYSE:USAC) and Western Gas Partners (NYSE:WES) are both oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, valuation, dividends, profitability, institutional ownership, earnings and analyst recommendations.

Profitability

This table compares USA Compression Partners and Western Gas Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
USA Compression Partners -0.72% 2.24% 0.84%
Western Gas Partners 22.80% 12.18% 5.68%

Dividends

USA Compression Partners pays an annual dividend of $2.10 per share and has a dividend yield of 12.6%. Western Gas Partners pays an annual dividend of $3.80 per share and has a dividend yield of 8.2%. USA Compression Partners pays out 1,312.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Gas Partners pays out 292.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Gas Partners has raised its dividend for 10 consecutive years.

Insider & Institutional Ownership

42.2% of USA Compression Partners shares are held by institutional investors. Comparatively, 59.8% of Western Gas Partners shares are held by institutional investors. 0.0% of Western Gas Partners shares are held by company 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.

Risk and Volatility

USA Compression Partners has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500. Comparatively, Western Gas Partners has a beta of 1.3, meaning that its share price is 30% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for USA Compression Partners and Western Gas Partners, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
USA Compression Partners 0 2 4 0 2.67
Western Gas Partners 0 7 6 0 2.46

USA Compression Partners currently has a consensus price target of $20.67, suggesting a potential upside of 24.20%. Western Gas Partners has a consensus price target of $53.31, suggesting a potential upside of 15.26%. Given USA Compression Partners’ stronger consensus rating and higher possible upside, equities research analysts clearly believe USA Compression Partners is more favorable than Western Gas Partners.

Valuation & Earnings

This table compares USA Compression Partners and Western Gas Partners’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
USA Compression Partners $280.22 million 5.34 $11.44 million $0.16 104.00
Western Gas Partners $2.25 billion 3.14 $567.48 million $1.30 35.58

Western Gas Partners has higher revenue and earnings than USA Compression Partners. Western Gas Partners is trading at a lower price-to-earnings ratio than USA Compression Partners, indicating that it is currently the more affordable of the two stocks.

Summary

Western Gas Partners beats USA Compression Partners on 12 of the 17 factors compared between the two stocks.

USA Compression Partners Company Profile

USA Compression Partners, LP provides compression services under term contracts with customers in the natural gas and crude oil industries in the United States. The company engineers, designs, operates, services, and repairs its compression units; and maintains related support inventory and equipment. It also provides compression services in various shale plays, including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales. As of December 31, 2017, the company had approximately 1,799,781 horsepower in its fleet. It serves oil companies; and independent producers, processors, gatherers, and transporters of natural gas and crude oil. USA Compression GP, LLC operates as the general partner of USA Compression Partners, LP. The company was formerly known as Compression Holdings, LP, and changed its name to USA Compression Partners, LP in June 2011. USA Compression Partners, LP was founded in 1998 and is headquartered in Austin, Texas.

Western Gas Partners Company Profile

Western Gas Partners, LP acquires, develops, owns, and operates midstream energy assets in the Rocky Mountains, North-central Pennsylvania, and Texas. It is involved in gathering, processing, compressing, treating, and transporting natural gas, condensate, natural gas liquids, and crude oil. Western Gas Holdings, LLC serves as the general partner of Western Gas Partners, LP. The company was founded in 2007 and is headquartered in The Woodlands, Texas. Western Gas Partners LP is a subsidiary of Anadarko Petroleum Corporation.

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