Energy Transfer Equity, L.P. (NYSE: ETE) and TC PipeLines, (NYSE:TCP) are both mid-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Institutional and Insider Ownership

48.4% of Energy Transfer Equity, L.P. shares are held by institutional investors. Comparatively, 60.6% of TC PipeLines, shares are held by institutional investors. 3.3% of Energy Transfer Equity, L.P. shares are held by insiders. Comparatively, 0.1% of TC PipeLines, shares are held by 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 Energy Transfer Equity, L.P. and TC PipeLines,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Energy Transfer Equity, L.P. 2.18% 3.79% 1.14%
TC PipeLines, 62.63% 19.77% 7.16%

Volatility and Risk

Energy Transfer Equity, L.P. has a beta of 1.9, meaning that its share price is 90% more volatile than the S&P 500. Comparatively, TC PipeLines, has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

Dividends

Energy Transfer Equity, L.P. pays an annual dividend of $1.14 per share and has a dividend yield of 6.5%. TC PipeLines, pays an annual dividend of $4.00 per share and has a dividend yield of 7.7%. Energy Transfer Equity, L.P. pays out 144.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TC PipeLines, pays out 127.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Energy Transfer Equity, L.P. has increased its dividend for 7 consecutive years and TC PipeLines, has increased its dividend for 4 consecutive years. TC PipeLines, is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations and price targets for Energy Transfer Equity, L.P. and TC PipeLines,, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Energy Transfer Equity, L.P. 0 4 10 0 2.71
TC PipeLines, 1 3 1 0 2.00

Energy Transfer Equity, L.P. currently has a consensus target price of $20.50, suggesting a potential upside of 17.14%. TC PipeLines, has a consensus target price of $62.75, suggesting a potential upside of 20.70%. Given TC PipeLines,’s higher possible upside, analysts clearly believe TC PipeLines, is more favorable than Energy Transfer Equity, L.P..

Valuation and Earnings

This table compares Energy Transfer Equity, L.P. and TC PipeLines,’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Energy Transfer Equity, L.P. $42.15 billion 0.45 $5.53 billion $0.79 22.15
TC PipeLines, $481.00 million 7.50 $399.00 million $3.13 16.61

Energy Transfer Equity, L.P. has higher revenue and earnings than TC PipeLines,. TC PipeLines, is trading at a lower price-to-earnings ratio than Energy Transfer Equity, L.P., indicating that it is currently the more affordable of the two stocks.

Summary

TC PipeLines, beats Energy Transfer Equity, L.P. on 9 of the 17 factors compared between the two stocks.

Energy Transfer Equity, L.P. Company Profile

Energy Transfer Equity, L.P. (ETE) owns equity interests in Energy Transfer Partners, L.P. (ETP) and Sunoco LP, which are engaged in diversified energy-related services. The Company’s segments include Investment in ETP, including the consolidated operations of ETP; Investment in Sunoco LP, including the consolidated operations of Sunoco LP; Investment in Lake Charles LNG, including the operations of Lake Charles LNG, and Corporate and Other. Its Investment in ETP segment includes the ETP’s operations, which include intrastate transportation and storage operations; interstate transportation and storage operations; midstream operations; liquids transportation and services operations; ETP’s Investment in Sunoco Logistics; Retail Marketing operations, and ETP’s other operations and Investments. The Investment in Sunoco LP segment includes wholesale operations and retail operations. Lake Charles LNG owns a LNG import terminal and regasification facility located on Louisiana’s Gulf Coast.

TC PipeLines, Company Profile

TC PipeLines, LP is a master limited partnership. The Company acquires, owns and participates in the management of energy infrastructure businesses in North America. The Company’s pipeline systems transport natural gas in the United States. As of December 31, 2016, the Company had four pipelines and equity ownership interests in three natural gas interstate pipeline systems that are collectively designed to transport approximately 9.1 billion cubic feet per day of natural gas from producing regions and import facilities to market hubs and consuming markets primarily in the Western, Midwestern and Eastern United States. The Company’s pipeline systems include Gas Transmission Northwest LLC (GTN), Bison Pipeline LLC (Bison), North Baja Pipeline, LLC (North Baja), Tuscarora Gas Transmission Company (Tuscarora), Northern Border Pipeline Company (Northern Border), Portland Natural Gas Transmission System (PNGTS), and Great Lakes Gas Transmission Limited Partnership (Great Lakes).

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