Comparing Devon Energy (DVN) and EQT GP (EQGP)

Devon Energy (NYSE: DVN) and EQT GP (NYSE:EQGP) are both mid-cap oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Profitability

This table compares Devon Energy and EQT GP’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Devon Energy 11.62% 6.88% 2.88%
EQT GP 30.98% 12.14% 7.78%

Insider and Institutional Ownership

77.6% of Devon Energy shares are held by institutional investors. Comparatively, 10.2% of EQT GP shares are held by institutional investors. 0.5% of Devon Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Devon Energy pays an annual dividend of $0.24 per share and has a dividend yield of 0.6%. EQT GP pays an annual dividend of $0.91 per share and has a dividend yield of 3.6%. Devon Energy pays out 8.2% of its earnings in the form of a dividend. EQT GP pays out 96.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Devon Energy and EQT GP’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Devon Energy $12.20 billion 1.60 -$3.30 billion $2.93 12.68
EQT GP $735.61 million 9.18 $234.17 million $0.94 26.99

EQT GP has lower revenue, but higher earnings than Devon Energy. Devon Energy is trading at a lower price-to-earnings ratio than EQT GP, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Devon Energy and EQT GP, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Devon Energy 0 4 14 0 2.78
EQT GP 0 3 5 0 2.63

Devon Energy presently has a consensus target price of $46.59, indicating a potential upside of 25.41%. EQT GP has a consensus target price of $32.86, indicating a potential upside of 29.51%. Given EQT GP’s higher possible upside, analysts plainly believe EQT GP is more favorable than Devon Energy.

Risk & Volatility

Devon Energy has a beta of 2.21, meaning that its share price is 121% more volatile than the S&P 500. Comparatively, EQT GP has a beta of 1.19, meaning that its share price is 19% more volatile than the S&P 500.

About Devon Energy

Devon Energy Corporation is an independent energy company. The Company also controls EnLink Midstream Partners, L.P. (EnLink). The Company’s segments include U.S., Canada and EnLink. The Company is engaged primarily in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs). The Company’s operations are concentrated in various North American onshore areas in the United States and Canada. The Company’s U.S. and Canada segments are primarily engaged in oil and gas exploration and production activities. EnLink is a master limited partnership (MLP) with a midstream business and operations located across the United States. EnLink focuses on providing gathering, transmission, processing, storage, fractionation and marketing to upstream oil and natural gas producers. The Company’s properties include Barnett Shale, Delaware Basin, Eagle Ford, Heavy Oil, Rockies Oil and STACK.

About EQT GP

EQT GP Holdings, LP (EQGP) is a limited partnership company and subsidiary of EQT Gathering Holdings, LLC (EQT Gathering Holdings). The Company was formed to own EQT Corporation’s (EQT’s) partnership interests in EQT Midstream Partners, LP (EQM), a limited partnership formed by EQT to own, operate, acquire and develop midstream assets in the Appalachian Basin. Its segments include Gathering, and Transmission. The Gathering segment primarily includes high pressure gathering lines and the Federal Energy Regulatory Commission (FERC)-regulated low pressure gathering system. The Transmission segment includes EQM’s FERC-regulated interstate pipeline and storage business. EQGP has no independent operations. It has partnership interests in EQM. As of December 31, 2016, EQM provided midstream services to EQT and various third parties across 24 counties in Pennsylvania, West Virginia and Ohio through its two primary assets: the gathering system, and the transmission and storage system.

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