Critical Review: Western Refining Logistics (WNRL) & Pembina Pipeline (PBA)

Western Refining Logistics (NYSE: WNRL) and Pembina Pipeline (NYSE:PBA) are both energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitability, earnings, institutional ownership, valuation and risk.

Volatility and Risk

Western Refining Logistics has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500. Comparatively, Pembina Pipeline has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500.

Profitability

This table compares Western Refining Logistics and Pembina Pipeline’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Western Refining Logistics 3.05% 78.84% 12.72%
Pembina Pipeline 11.66% 8.36% 3.65%

Dividends

Western Refining Logistics pays an annual dividend of $1.87 per share and has a dividend yield of 7.8%. Pembina Pipeline pays an annual dividend of $1.68 per share and has a dividend yield of 4.8%. Western Refining Logistics pays out 174.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pembina Pipeline pays out 169.7% 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 Refining Logistics has increased its dividend for 3 consecutive years and Pembina Pipeline has increased its dividend for 2 consecutive years. Western Refining Logistics is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

40.1% of Western Refining Logistics shares are owned by institutional investors. Comparatively, 42.3% of Pembina Pipeline shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Western Refining Logistics and Pembina Pipeline’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Western Refining Logistics N/A N/A N/A $1.07 22.29
Pembina Pipeline $3.22 billion 5.46 $351.92 million $0.99 35.33

Pembina Pipeline has higher revenue and earnings than Western Refining Logistics. Western Refining Logistics is trading at a lower price-to-earnings ratio than Pembina Pipeline, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Western Refining Logistics and Pembina Pipeline, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Western Refining Logistics 0 1 0 0 2.00
Pembina Pipeline 0 1 3 0 2.75

Summary

Pembina Pipeline beats Western Refining Logistics on 7 of the 13 factors compared between the two stocks.

About Western Refining Logistics

Western Refining Logistics, LP owns, operates, develops, and acquires logistics and related assets and businesses to include terminals, storage tanks, pipelines and other logistics assets related to the terminaling, transportation, storage and distribution of crude oil and refined products. The Company’s segments include logistics and wholesale. The Company operates its logistics business and wholesale business under commercial and service agreements with Western Refining, Inc. (Western). Its logistics assets consist of pipeline and gathering infrastructure and terminalling, transportation and storage assets in the Southwest and the Upper Great Plains region. Its wholesale business purchases its petroleum fuels from Western, and its lubricants and additional petroleum fuels from third-party suppliers.

About Pembina Pipeline

Pembina Pipeline Corporation is an energy transportation and service provider. The Company operates through four segments. The Conventional Pipelines segment consists of the tariff-based operations of pipelines and related facilities to deliver crude oil, condensate and natural gas liquids (NGL) in Alberta, British Columbia, Saskatchewan, and North Dakota, United States. The Oil Sands & Heavy Oil segment consists of the Syncrude, Horizon, Nipisi and Mitsue Pipelines, and the Cheecham Lateral. These pipelines and related facilities deliver synthetic crude oil produced from oil sands under long-term cost-of-service arrangements. The Gas Services segment consists of natural gas gathering and processing facilities. The Midstream segment consists of the Company’s interests in extraction and fractionation facilities, terminalling and storage hub services under a mixture of short, medium and long-term contractual arrangements.

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