American Midstream Partners (NYSE: AMID) and Western Gas Partners (NYSE:WES) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
American Midstream Partners 0.12% -11.67% -2.29%
Western Gas Partners 26.41% 14.68% 7.24%

Analyst Recommendations

This is a breakdown of current ratings and price targets for American Midstream Partners and Western Gas Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Midstream Partners 0 2 0 0 2.00
Western Gas Partners 0 6 5 0 2.45

American Midstream Partners currently has a consensus price target of $15.00, indicating a potential upside of 4.90%. Western Gas Partners has a consensus price target of $57.73, indicating a potential upside of 11.08%. Given Western Gas Partners’ stronger consensus rating and higher possible upside, analysts plainly believe Western Gas Partners is more favorable than American Midstream Partners.

Valuation & Earnings

This table compares American Midstream Partners and Western Gas Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Midstream Partners $232.68 million 4.43 -$3.47 million ($1.55) -9.23
Western Gas Partners $1.80 billion 4.40 $591.33 million $1.23 42.25

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

Dividends

American Midstream Partners pays an annual dividend of $1.65 per share and has a dividend yield of 11.5%. Western Gas Partners pays an annual dividend of $3.62 per share and has a dividend yield of 7.0%. American Midstream Partners pays out -106.5% of its earnings in the form of a dividend. Western Gas Partners pays out 294.3% 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 increased its dividend for 10 consecutive years. American Midstream Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

43.0% of American Midstream Partners shares are held by institutional investors. Comparatively, 61.9% of Western Gas Partners shares are held by institutional investors. 5.4% of American Midstream Partners shares are held by insiders. Comparatively, 0.0% of Western Gas Partners shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility and Risk

American Midstream Partners has a beta of 0.96, meaning that its stock price is 4% less volatile than the S&P 500. Comparatively, Western Gas Partners has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500.

Summary

Western Gas Partners beats American Midstream Partners on 13 of the 17 factors compared between the two stocks.

American Midstream Partners Company Profile

American Midstream Partners, LP owns, operates, develops and acquires a portfolio of midstream energy assets. The Company provides midstream infrastructure that links producers of natural gas, crude oil, natural gas liquids (NGLs), condensate and specialty chemicals to numerous intermediate and end-use markets. Its segments include gathering and processing, transmission and terminals. Through its segments, it is engaged in the business of gathering, treating, processing, and transporting natural gas; gathering, transporting, storing, treating and fractionating NGLs; gathering, storing and transporting crude oil and condensates, and storing specialty chemical products. Its gathering and processing assets are primarily located in the Permian Basin of West Texas; the Cotton Valley/Haynesville Shale of East Texas; the Eagle Ford Shale of South Texas; the Bakken Shale of North Dakota, and offshore in the Gulf of Mexico.

Western Gas Partners Company Profile

Western Gas Partners, LP is a master limited partnership (MLP) that acquires, owns, develops and operates midstream energy assets. The Company is engaged in the business of gathering, processing, compressing, treating and transporting natural gas, condensate, natural gas liquids (NGLs) and crude oil in the United States. The Company provides midstream services for Anadarko Petroleum Corporation (Anadarko), as well as for third-party producers and customers. The Company’s operations and activities are managed by its general partner, which is indirectly controlled by Anadarko through Western Gas Equity Partners, LP (WGP). As of December 31, 2016, its assets and investments consisted of gathering systems, treating facilities, natural gas processing plants/trains, NGL pipelines, natural gas pipelines and oil pipelines. These assets and investments are located in the Rocky Mountains (Colorado, Utah and Wyoming), North-central Pennsylvania and Texas.

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