SemGroup (NYSE:SEMG) and Key Energy Services (OTCMKTS:KEGX) are both small-cap oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, earnings, analyst recommendations, profitability and risk.

Profitability

This table compares SemGroup and Key Energy Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SemGroup -1.84% 0.07% 0.02%
Key Energy Services -20.26% -2,602.22% -23.27%

Analyst Recommendations

This is a summary of recent ratings for SemGroup and Key Energy Services, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SemGroup 1 5 0 0 1.83
Key Energy Services 0 1 0 0 2.00

SemGroup presently has a consensus target price of $15.67, suggesting a potential upside of 4.31%. Given SemGroup’s higher probable upside, equities research analysts clearly believe SemGroup is more favorable than Key Energy Services.

Volatility and Risk

SemGroup has a beta of 1.6, meaning that its stock price is 60% more volatile than the S&P 500. Comparatively, Key Energy Services has a beta of 3.23, meaning that its stock price is 223% more volatile than the S&P 500.

Institutional and Insider Ownership

95.6% of SemGroup shares are owned by institutional investors. Comparatively, 0.9% of Key Energy Services shares are owned by institutional investors. 1.0% of SemGroup shares are owned by insiders. Comparatively, 2.7% of Key Energy Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares SemGroup and Key Energy Services’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SemGroup $2.50 billion 0.48 -$26.75 million ($0.19) -79.05
Key Energy Services $521.70 million 0.00 -$88.80 million ($4.53) -0.02

SemGroup has higher revenue and earnings than Key Energy Services. SemGroup is trading at a lower price-to-earnings ratio than Key Energy Services, indicating that it is currently the more affordable of the two stocks.

Summary

SemGroup beats Key Energy Services on 9 of the 13 factors compared between the two stocks.

About SemGroup

SemGroup Corporation provides gathering, transportation, storage, distribution, marketing, and other midstream services for producers, refiners of petroleum products, and other market participants. The company operates in three segments: U.S. Liquids, U.S. Gas, and Canada. The U.S. Liquids segment operates crude oil pipelines, truck transportation, storage, terminals, and marketing businesses; stores, blends, and transports refinery products and refinery feedstock through pipeline, barge, rail, truck, and ship; and operates a residual fuel oil storage terminal in the U.S. Gulf Coast. This segment has 18.2 million barrels of storage capacity on the Houston Ship Channel; and 7.6 million barrels of storage capacity at the Cushing Interchange. It also operates a 460-mile crude oil gathering and transportation pipeline system in Kansas and northern Oklahoma; 75-mile crude oil gathering pipeline system that transports crude oil from production facilities in the DJ Basin to the pipeline owned by White Cliffs Pipeline, L.L.C.; 2 parallel 527-mile pipelines that transports crude oil from Platteville, Colorado to Cushing, Oklahoma; 3 pipelines with an aggregate of 106 miles of pipe; 30-lane crude oil truck unloading facility in Platteville, Colorado; and crude oil trucking fleet of approximately 245 transport trucks and 235 trailers. The U.S. Gas segment provides natural gas gathering, processing, and marketing services. It operates 842 miles of gathering lines in Oklahoma; and a 53-mile high pressure gathering pipeline located in the STACK play. The Canada segment owns and operates natural gas processing and gathering facilities with approximately 530 miles of natural gas gathering and transportation pipelines in Alberta, Canada. SemGroup Corporation was founded in 2000 and is headquartered in Tulsa, Oklahoma.

About Key Energy Services

Key Energy Services, Inc. operates as an onshore rig-based well servicing contractor in the United States. It operates through Rig Services, Fishing and Rental Services, Coiled Tubing Services, and Fluid Management Services segments. The Rig Services segment is involved in the completion of newly drilled wells; workover and recompletion of existing oil and natural gas wells; well maintenance activities; and plugging and abandonment of wells at the end of their useful lives, as well as provision of specialty drilling services to oil and natural gas producers. The Fishing and Rental Services segment provides fishing services that involve recovering lost or stuck equipment in the wellbore utilizing fishing tools; and rents drill pipes, tubulars, handling tools, pressure-control equipment, pumps, power swivels, reversing units, and foam air units. The Coiled Tubing Services segment offers services for wellbore clean-outs, nitrogen jet lifts, through-tubing fishing, and formation stimulations; mills temporary isolation plugs that separate frac zones; and other pre- and post-hydraulic fracturing well preparation services. The Fluid Management Services segment offers transportation and well-site storage services for fluids utilized in drilling, completions, workover, and maintenance activities; and disposal services for fluids produced subsequent to well completion. It also operates a fleet of hot oilers used to clear soluble restrictions in a wellbore. The company was formerly known as Key Energy Group, Inc. and changed its name to Key Energy Services, Inc. in December 1998. Key Energy Services, Inc. was founded in 1977 and is based in Houston, Texas.

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