VTTI Energy Partners (VTTI) versus Shell Midstream Partners (SHLX) Critical Analysis

VTTI Energy Partners (NYSE: VTTI) and Shell Midstream Partners (NYSE:SHLX) are both oil & gas transportation services – nec companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, risk, profitability and institutional ownership.

Risk and Volatility

VTTI Energy Partners has a beta of 1.18, meaning that its stock price is 18% more volatile than the S&P 500. Comparatively, Shell Midstream Partners has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500.

Dividends

VTTI Energy Partners pays an annual dividend of $1.34 per share and has a dividend yield of 6.9%. Shell Midstream Partners pays an annual dividend of $1.27 per share and has a dividend yield of 4.4%. VTTI Energy Partners pays out 165.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Shell Midstream Partners has increased its dividend for 2 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and target prices for VTTI Energy Partners and Shell Midstream Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
VTTI Energy Partners 0 3 0 0 2.00
Shell Midstream Partners 0 2 5 0 2.71

VTTI Energy Partners currently has a consensus target price of $19.50, suggesting a potential upside of 0.00%. Shell Midstream Partners has a consensus target price of $33.71, suggesting a potential upside of 17.55%. Given Shell Midstream Partners’ stronger consensus rating and higher possible upside, analysts plainly believe Shell Midstream Partners is more favorable than VTTI Energy Partners.

Insider and Institutional Ownership

74.5% of VTTI Energy Partners shares are owned by institutional investors. Comparatively, 53.0% of Shell Midstream Partners shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares VTTI Energy Partners and Shell Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
VTTI Energy Partners 35.11% 8.09% 7.61%
Shell Midstream Partners 85.14% 3,826.80% 27.98%

Valuation & Earnings

This table compares VTTI Energy Partners and Shell Midstream Partners’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
VTTI Energy Partners N/A N/A N/A $0.81 24.07
Shell Midstream Partners $291.30 million 18.49 $244.90 million $1.27 22.58

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

Summary

Shell Midstream Partners beats VTTI Energy Partners on 10 of the 13 factors compared between the two stocks.

VTTI Energy Partners Company Profile

VTTI Energy Partners LP provides terminaling services for third party companies engaged in the production, processing, distribution and marketing of refined petroleum products and crude oil. The Company operates through the segment of energy storage terminaling business. Its assets consist of approximately 42.6% interest in VTTI MLP B.V., which owns a portfolio of over six terminals with over 400 tanks and approximately 35.7 million barrels of refined petroleum product and crude oil storage capacity located in Europe, the Middle East, Asia and North America. Its terminals are located in international supply and demand centers for refined petroleum products and crude oil and provide midstream infrastructure services to its customers at these international market hubs. It provides storage and terminaling services for energy industry participants, including marketing companies, integrated oil companies, national oil companies, distributors, and chemical and petrochemical companies.

Shell Midstream Partners Company Profile

Shell Midstream Partners, L.P. is a master limited partnership company, which owns, operates, develops and acquires pipelines and other midstream assets. The Company conducts its operations through its subsidiary, Shell Midstream Operating, LLC. Its assets consist of interests in entities that own crude oil and refined products pipelines serving as key infrastructure to transport onshore and offshore crude oil production to Gulf Coast and Midwest refining markets and to deliver refined products from those markets to demand centers. As of December 31, 2016, it owned interests in seven crude oil pipeline systems, three refined products systems, one natural gas gathering pipeline system and a crude tank storage and terminal system. Its pipeline and terminal systems include Zydeco crude oil system, Auger crude oil system, Mars crude oil system, Bengal product system, Poseidon crude oil system, Odyssey crude oil system, Proteus crude oil system and Endymion crude oil system.

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