Kinder Morgan (NYSE: KMI) and Magellan Midstream Partners L.P. (NYSE:MMP) are both large-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitabiliy, analyst recommendations, dividends, earnings and institutional ownership.

Dividends

Kinder Morgan pays an annual dividend of $0.50 per share and has a dividend yield of 2.5%. Magellan Midstream Partners L.P. pays an annual dividend of $3.56 per share and has a dividend yield of 5.2%. Kinder Morgan pays out 161.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Magellan Midstream Partners L.P. pays out 96.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Magellan Midstream Partners L.P. has raised its dividend for 7 consecutive years. Magellan Midstream Partners L.P. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Kinder Morgan has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Magellan Midstream Partners L.P. has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Kinder Morgan and Magellan Midstream Partners L.P., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kinder Morgan 0 6 12 0 2.67
Magellan Midstream Partners L.P. 2 8 5 0 2.20

Kinder Morgan presently has a consensus price target of $23.71, indicating a potential upside of 20.07%. Magellan Midstream Partners L.P. has a consensus price target of $78.54, indicating a potential upside of 15.06%. Given Kinder Morgan’s stronger consensus rating and higher probable upside, research analysts clearly believe Kinder Morgan is more favorable than Magellan Midstream Partners L.P..

Valuation and Earnings

This table compares Kinder Morgan and Magellan Midstream Partners L.P.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Kinder Morgan $13.51 billion 3.26 $6.10 billion $0.31 63.71
Magellan Midstream Partners L.P. $2.43 billion 6.41 $1.12 billion $3.68 18.55

Kinder Morgan has higher revenue and earnings than Magellan Midstream Partners L.P.. Magellan Midstream Partners L.P. is trading at a lower price-to-earnings ratio than Kinder Morgan, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Kinder Morgan and Magellan Midstream Partners L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kinder Morgan 6.20% 4.41% 1.93%
Magellan Midstream Partners L.P. 34.63% 41.81% 12.78%

Institutional & Insider Ownership

57.7% of Kinder Morgan shares are owned by institutional investors. Comparatively, 62.9% of Magellan Midstream Partners L.P. shares are owned by institutional investors. 14.0% of Kinder Morgan shares are owned by insiders. Comparatively, 0.2% of Magellan Midstream Partners L.P. shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Magellan Midstream Partners L.P. beats Kinder Morgan on 10 of the 17 factors compared between the two stocks.

Kinder Morgan Company Profile

Kinder Morgan, Inc. is an energy infrastructure company. It operates through five segments. Its Natural Gas Pipelines segment is engaged in the ownership and operation of interstate and intrastate natural gas pipeline and storage systems, and liquefied natural gas facilities, among others. Its CO2 segment is engaged in the production, transportation and marketing of carbon dioxide (CO2) to oil fields and the ownership and operation of a crude oil pipeline system, among others. Its Terminals segment is engaged in the ownership and/or operation of liquids and bulk terminal facilities located throughout the United States and portions of Canada, and Jones Act tankers. Its Products Pipelines segment is engaged in the ownership and operation of refined petroleum products, natural gas liquids and crude oil and condensate pipelines. Its Kinder Morgan Canada segment is engaged in the ownership and operation of the Trans Mountain pipeline system and Jet Fuel aviation turbine fuel pipeline.

Magellan Midstream Partners L.P. Company Profile

Magellan Midstream Partners, L.P. is principally engaged in the transportation, storage and distribution of refined petroleum products and crude oil. The Company operates through three segments: refined products, crude oil and marine storage. As of December 31, 2016, its asset portfolio, including the assets of its joint ventures, consisted of its refined products segment, consisting 9,700-mile refined products pipeline system with 53 terminals, as well as 26 independent terminals not connected to its pipeline system and its 1,100-mile ammonia pipeline system; its crude oil segment, consisted of approximately 2,200 miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately 26 million barrels, of which 16 million are used for contract storage, and its marine storage segment, consisted of five marine terminals located along coastal waterways with an aggregate storage capacity of approximately 26 million barrels.

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