DCP Midstream (DCP) and Energy Transfer LP Unit (ET) Critical Contrast

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DCP Midstream (NYSE:DCP) and Energy Transfer LP Unit (NYSE:ET) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Earnings & Valuation

This table compares DCP Midstream and Energy Transfer LP Unit’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DCP Midstream $8.46 billion 0.52 $229.00 million $0.53 58.15
Energy Transfer LP Unit $40.52 billion 0.41 $915.00 million $1.21 11.87

Energy Transfer LP Unit has higher revenue and earnings than DCP Midstream. Energy Transfer LP Unit is trading at a lower price-to-earnings ratio than DCP Midstream, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

DCP Midstream has a beta of 2.45, indicating that its stock price is 145% more volatile than the S&P 500. Comparatively, Energy Transfer LP Unit has a beta of 1.75, indicating that its stock price is 75% more volatile than the S&P 500.

Institutional and Insider Ownership

54.9% of DCP Midstream shares are held by institutional investors. Comparatively, 51.2% of Energy Transfer LP Unit shares are held by institutional investors. 0.0% of DCP Midstream shares are held by insiders. Comparatively, 3.3% of Energy Transfer LP Unit shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares DCP Midstream and Energy Transfer LP Unit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DCP Midstream 2.76% 4.18% 2.02%
Energy Transfer LP Unit 2.58% 5.68% 1.98%

Analyst Recommendations

This is a breakdown of current ratings for DCP Midstream and Energy Transfer LP Unit, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DCP Midstream 1 5 7 0 2.46
Energy Transfer LP Unit 0 0 5 0 3.00

DCP Midstream currently has a consensus target price of $40.73, indicating a potential upside of 32.15%. Energy Transfer LP Unit has a consensus target price of $19.67, indicating a potential upside of 36.95%. Given Energy Transfer LP Unit’s stronger consensus rating and higher possible upside, analysts clearly believe Energy Transfer LP Unit is more favorable than DCP Midstream.

Dividends

DCP Midstream pays an annual dividend of $3.12 per share and has a dividend yield of 10.1%. Energy Transfer LP Unit pays an annual dividend of $1.22 per share and has a dividend yield of 8.5%. DCP Midstream pays out 588.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Energy Transfer LP Unit pays out 100.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

About DCP Midstream

DCP Midstream, LP, together with its subsidiaries, owns, operates, acquires, and develops a portfolio of midstream energy assets in the United States. The company operates in two segments, Gathering and Processing, and Logistics and Marketing. The Gathering and Processing segment is involved in gathering, compressing, treating, and processing natural gas; producing and fractionating natural gas liquids (NGLs); and recovering condensate. The Logistics and Marketing segment engages in transporting, trading, marketing, and storing natural gas and NGLs; fractionating NGLs; and wholesale propane logistics. As of February 13, 2018, it owned and operated approximately 60 plants and 63,000 miles of natural gas and NGLs pipelines with operations in 17 states. The company serves petrochemical and refining companies, and retail propane distributors. DCP Midstream GP, LP serves as the general partner of the company. The company was formerly known as DCP Midstream Partners, LP and changed its name to DCP Midstream, LP in January 2017. DCP Midstream, LP was founded in 2005 and is headquartered in Denver, Colorado.

About Energy Transfer LP Unit

Energy Transfer LP provides diversified energy-related services in the United States. It owns and operates approximately 7,900 miles of natural gas transportation pipelines and three natural gas storage facilities in Texas; and approximately 11,800 miles of interstate natural gas pipelines. The company sells natural gas to electric utilities, independent power plants, local distribution companies, industrial end-users, and other marketing companies. It owns and operates natural gas and natural gas liquid (NGL) gathering pipelines, as well as natural gas processing plants, treating facilities, and conditioning facilities in Texas, New Mexico, West Virginia, Pennsylvania, and Louisiana; natural gas gathering, oil pipeline, and oil stabilization facilities in South Texas; a natural gas gathering system in Ohio; and transportation and supply of water to natural gas producers in Pennsylvania. The company also owns approximately 4,300 miles of NGL pipelines, 5 NGL and propane fractionation facilities, and NGL storage facilities with aggregate working storage capacity of approximately 53 million barrels. It also sells gasoline, middle distillates, and motor fuel at retail, as well as crude oil, NGLs, and refined products; operates convenience stores; and distributes motor fuels and other petroleum products. The company provides natural gas compression services; treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration, and British thermal unit management services; and manages coal and natural resources properties, as well as sells standing timber, leases coal-related infrastructure facilities, collects oil and gas royalties, and generates a total of 75 megawatts electrical power. The company was formerly known as Energy Transfer Equity, L.P. and changed its name to Energy Transfer LP in October 2018. The company was founded in 2002 and is based in Dallas, Texas.

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