Contrasting Williams Companies (WMB) and EnLink Midstream Partners (ENLK)

Williams Companies (NYSE: WMB) and EnLink Midstream Partners (NYSE:ENLK) are both mid-cap energy companies, but which is the better stock? We will compare the two companies based on the strength of their risk, dividends, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Institutional and Insider Ownership

84.8% of Williams Companies shares are owned by institutional investors. Comparatively, 41.7% of EnLink Midstream Partners shares are owned by institutional investors. 0.5% of Williams Companies shares are owned by insiders. Comparatively, 0.2% of EnLink Midstream Partners shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Williams Companies and EnLink Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Williams Companies 5.90% 3.23% 1.02%
EnLink Midstream Partners 0.76% 1.20% 0.53%

Earnings & Valuation

This table compares Williams Companies and EnLink Midstream Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Williams Companies $7.50 billion 3.20 -$424.00 million $0.57 51.00
EnLink Midstream Partners $4.25 billion 1.27 -$565.20 million ($0.23) -67.17

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

Analyst Ratings

This is a summary of current ratings for Williams Companies and EnLink Midstream Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Williams Companies 0 2 10 1 2.92
EnLink Midstream Partners 0 6 4 0 2.40

Williams Companies currently has a consensus price target of $33.73, indicating a potential upside of 16.02%. EnLink Midstream Partners has a consensus price target of $18.29, indicating a potential upside of 18.35%. Given EnLink Midstream Partners’ higher probable upside, analysts plainly believe EnLink Midstream Partners is more favorable than Williams Companies.

Risk and Volatility

Williams Companies has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, EnLink Midstream Partners has a beta of 2.08, suggesting that its share price is 108% more volatile than the S&P 500.

Dividends

Williams Companies pays an annual dividend of $1.20 per share and has a dividend yield of 4.1%. EnLink Midstream Partners pays an annual dividend of $1.56 per share and has a dividend yield of 10.1%. Williams Companies pays out 210.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EnLink Midstream Partners pays out -678.2% of its earnings in the form of a dividend. Williams Companies has increased its dividend for 2 consecutive years. EnLink Midstream Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Williams Companies beats EnLink Midstream Partners on 13 of the 17 factors compared between the two stocks.

About Williams Companies

The Williams Companies, Inc. is an energy infrastructure company. The Company is focused on connecting North America’s hydrocarbon resource plays to markets for natural gas, natural gas liquids (NGL), and olefins. As of December 31, 2016, its interstate gas pipelines, midstream and olefins production interests were held through its investment in Williams Partners L.P. (WPZ). The Company’s segments include Williams Partners, Williams NGL & Petchem Services and Other. The Williams Partners segment includes its consolidated master limited partnership, WPZ. The gas pipeline business includes interstate natural gas pipelines and pipeline joint project investments. The midstream business provides natural gas gathering, treating, processing and compression services. The Williams NGL & Petchem Services segment includes its Texas Belle pipeline and certain other domestic olefins pipeline assets. Other segment includes its corporate operations and Canadian construction services company.

About EnLink Midstream Partners

EnLink Midstream Partners, LP is a midstream company. The Company’s business activities are conducted through its subsidiary, EnLink Midstream Operating, LP (the Operating Partnership) and the subsidiaries of the Operating Partnership. The Company operates through five segments: Texas, Oklahoma, Louisiana, Crude and Condensate, and Corporate. The Company focuses on providing midstream energy services, including gathering, processing, transmission, fractionation, storage, condensate stabilization, brine services and marketing to producers of natural gas, natural gas liquids (NGLs), crude oil and condensate. As of December 31, 2016, its midstream energy asset network included approximately 11,000 miles of pipelines, 20 natural gas processing plants, seven fractionators, barge and rail terminals, product storage facilities, purchasing and marketing capabilities, brine disposal wells, a crude oil trucking fleet, and equity investments in certain private midstream companies.

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