Buckeye Partners L.P. (NYSE: BPL) and Shell Midstream Partners, L.P. (NYSE:SHLX) are both mid-cap oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.

Institutional and Insider Ownership

70.7% of Buckeye Partners L.P. shares are owned by institutional investors. Comparatively, 49.6% of Shell Midstream Partners, L.P. shares are owned by institutional investors. 0.4% of Buckeye Partners L.P. shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Buckeye Partners L.P. and Shell Midstream Partners, L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Buckeye Partners L.P. 14.42% 11.04% 5.29%
Shell Midstream Partners, L.P. 87.22% 258.67% 28.64%

Dividends

Buckeye Partners L.P. pays an annual dividend of $5.05 per share and has a dividend yield of 8.7%. Shell Midstream Partners, L.P. pays an annual dividend of $1.22 per share and has a dividend yield of 4.6%. Buckeye Partners L.P. pays out 138.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners, L.P. pays out 98.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners, L.P. has raised its dividend for 14 consecutive years.

Risk and Volatility

Buckeye Partners L.P. has a beta of 1.11, meaning that its share price is 11% more volatile than the S&P 500. Comparatively, Shell Midstream Partners, L.P. has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500.

Valuation and Earnings

This table compares Buckeye Partners L.P. and Shell 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
Buckeye Partners L.P. $3.47 billion 2.36 $979.66 million $3.65 15.86
Shell Midstream Partners, L.P. $283.50 million 16.63 $160.60 million $1.24 21.43

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Buckeye Partners L.P. and Shell Midstream Partners, L.P., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Buckeye Partners L.P. 0 8 2 0 2.20
Shell Midstream Partners, L.P. 0 1 4 0 2.80

Buckeye Partners L.P. currently has a consensus price target of $72.00, suggesting a potential upside of 24.35%. Shell Midstream Partners, L.P. has a consensus price target of $36.00, suggesting a potential upside of 35.49%. Given Shell Midstream Partners, L.P.’s stronger consensus rating and higher probable upside, analysts clearly believe Shell Midstream Partners, L.P. is more favorable than Buckeye Partners L.P..

Summary

Shell Midstream Partners, L.P. beats Buckeye Partners L.P. on 11 of the 17 factors compared between the two stocks.

Buckeye Partners L.P. Company Profile

Buckeye Partners, L.P. (Buckeye) owns and operates a network of integrated assets providing midstream logistic solutions, primarily consisting of the transportation, storage, processing and marketing of liquid petroleum products. Its segments include Domestic Pipelines & Terminals, Global Marine Terminals and Merchant Services. As of December 31, 2016, the Domestic Pipelines & Terminals segment owned and operated approximately 6,000 miles of pipeline located primarily in the northeastern and upper Midwestern portions of the United States, and serviced approximately 110 delivery locations. The Global Marine Terminals segment provides marine accessible bulk storage and blending services, rail and truck rack loading/unloading, along with petroleum processing services in the East Coast and Gulf Coast regions of the United States and in the Caribbean. The Merchant Services segment is a wholesale distributor of petroleum products in the continental United States and in the Caribbean.

Shell Midstream Partners, L.P. Company Profile

Shell Midstream Partners, L.P. is a master limited partnership company, which owns, operates, develops and acquires pipelines and other midstream assets. The Company conducts its operations through its subsidiary, Shell Midstream Operating, LLC. Its assets consist of interests in entities that own crude oil and refined products pipelines serving as key infrastructure to transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and to deliver refined products from those markets to demand centers. As of December 31, 2016, it owned interests in seven crude oil pipeline systems, three refined products systems, one natural gas gathering pipeline system and a crude tank storage and terminal system. Its pipeline and terminal systems include Zydeco crude oil system, Auger crude oil system, Mars crude oil system, Bengal product system, Poseidon crude oil system, Odyssey crude oil system, Proteus crude oil system and Endymion crude oil system.

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