Critical Analysis: Williams Partners (WPZ) & TransGlobe Energy (TGA)

Williams Partners (NYSE: WPZ) and TransGlobe Energy (NASDAQ:TGA) are both energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Insider & Institutional Ownership

22.1% of Williams Partners shares are held by institutional investors. Comparatively, 17.9% of TransGlobe Energy shares are held by institutional investors. 4.0% of TransGlobe Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

Williams Partners has a beta of 1.43, suggesting that its share price is 43% more volatile than the S&P 500. Comparatively, TransGlobe Energy has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Williams Partners and TransGlobe Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Williams Partners 0 2 9 0 2.82
TransGlobe Energy 0 1 0 0 2.00

Williams Partners presently has a consensus target price of $46.00, suggesting a potential upside of 18.96%. Given Williams Partners’ stronger consensus rating and higher probable upside, analysts clearly believe Williams Partners is more favorable than TransGlobe Energy.

Earnings & Valuation

This table compares Williams Partners and TransGlobe Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Williams Partners $7.49 billion 5.03 $431.00 million $1.40 27.62
TransGlobe Energy $122.36 million 0.77 -$87.66 million ($1.53) -0.85

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

Profitability

This table compares Williams Partners and TransGlobe Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Williams Partners 17.02% 5.55% 2.90%
TransGlobe Energy -83.42% -7.08% -4.70%

Dividends

Williams Partners pays an annual dividend of $2.40 per share and has a dividend yield of 6.2%. TransGlobe Energy does not pay a dividend. Williams Partners pays out 171.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Williams Partners beats TransGlobe Energy on 14 of the 16 factors compared between the two stocks.

About Williams Partners

Williams Partners L.P. is an energy infrastructure company. The Company has operations across the natural gas value chain from gathering, processing, and interstate transportation of natural gas and natural gas liquids to petchem production of ethylene, propylene, and other olefins. It operates through its Northeast G&P, Atlantic-Gulf, West segment. Under the Northeast G&P segment, it owns and operates fractionation facilities at Moundsville, de-ethanization and condensate facilities at its Oak Grove processing plant. The Atlantic Gulf segment includes the Company’s interstate natural gas pipeline, Transcontinental Gas Pipe Line Company, LLC. The West segment includes its interstate natural gas pipeline, Northwest Pipeline, and natural gas gathering processing and treating operations.

About TransGlobe Energy

TransGlobe Energy Corporation is an oil exploration and production company. The Company’s activities are concentrated in the Arab Republic of Egypt (Egypt). The Company conducts its operations through the Arab Republic of Egypt segment. The Company is primarily engaged in oil exploration, development, production and the acquisition of properties. It holds interests in various production sharing concessions (PSC) in Eastern Desert Egypt and Western Desert Egypt. Its blocks in Eastern Desert Egypt include West Gharib, which covers approximately 34,860 acres; West Bakr, covering over 11,600 acres; North West (NW) Gharib, covering approximately 162,000 acres; South East (SE) Gharib, which covers over 125,650 acres, and South West (SW) Gharib, covering approximately 48,310 acres. Its blocks in the Western Desert Egypt include South Alamein, covering approximately 335,830 acres; South Ghazalat, covering over 465,300 acres, and North West (NW) Sitra, covering approximately 480,850 acres.

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