Analyzing Phillips 66 Partners (PSXP) and Shell Midstream Partners (SHLX)

Phillips 66 Partners (NYSE: PSXP) and Shell Midstream Partners (NYSE:SHLX) 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 dividends, institutional ownership, valuation, earnings, analyst recommendations, risk and profitability.

Profitability

This table compares Phillips 66 Partners and Shell Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Phillips 66 Partners 46.01% 33.24% 11.22%
Shell Midstream Partners 70.78% -300.60% 23.22%

Volatility & Risk

Phillips 66 Partners has a beta of 1.4, suggesting that its stock price is 40% more volatile than the S&P 500. Comparatively, Shell Midstream Partners has a beta of 1.23, suggesting that its stock price is 23% more volatile than the S&P 500.

Institutional & Insider Ownership

42.4% of Phillips 66 Partners shares are owned by institutional investors. Comparatively, 55.7% of Shell Midstream Partners shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Phillips 66 Partners and Shell Midstream Partners’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Phillips 66 Partners $1.17 billion 5.30 $461.00 million $2.59 19.65
Shell Midstream Partners $470.10 million 11.31 $372.60 million $1.28 18.55

Phillips 66 Partners has higher revenue and earnings than Shell Midstream Partners. Shell Midstream Partners is trading at a lower price-to-earnings ratio than Phillips 66 Partners, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Phillips 66 Partners and Shell Midstream Partners, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Phillips 66 Partners 0 5 8 0 2.62
Shell Midstream Partners 0 3 6 0 2.67

Phillips 66 Partners presently has a consensus target price of $56.88, suggesting a potential upside of 11.74%. Shell Midstream Partners has a consensus target price of $29.50, suggesting a potential upside of 24.21%. Given Shell Midstream Partners’ stronger consensus rating and higher probable upside, analysts plainly believe Shell Midstream Partners is more favorable than Phillips 66 Partners.

Dividends

Phillips 66 Partners pays an annual dividend of $2.86 per share and has a dividend yield of 5.6%. Shell Midstream Partners pays an annual dividend of $1.39 per share and has a dividend yield of 5.9%. Phillips 66 Partners pays out 110.4% 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 108.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Phillips 66 Partners has raised its dividend for 4 consecutive years and Shell Midstream Partners has raised its dividend for 2 consecutive years. Shell Midstream Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Phillips 66 Partners Company Profile

Phillips 66 Partners LP owns, operates, develops, and acquires crude oil, refined petroleum products, and natural gas liquids pipelines, terminals, and other transportation and midstream assets. The company operates pipeline assets in Lake Charles, Sweeny, Wood River, Borger/Ponca City, Billings, and Borger; terminal, rail rack, and storage assets in Louisiana, Texas, Illinois, Missouri, Kansas, Oklahoma, New Jersey, Washington, Wyoming, and Montana; marine assets in Lake Charles and Wood River; and natural gas liquids assets in Texas and Louisiana. Phillips 66 Partners GP LLC operates as the general partner of Phillips 66 Partners LP. The company was founded in 2013 and is headquartered in Houston, Texas. Phillips 66 Partners LP is a subsidiary of Phillips 66 Project Development Inc.

Shell Midstream Partners Company Profile

Shell Midstream Partners, L.P. owns, operates, develops, and acquires pipelines and other midstream assets in the United States. Its crude oil pipeline systems include a 350 miles of Zydeco pipeline system; a 130-miles of delta pipeline; a 174-mile offshore Gulf of Mexico corridor pipeline; and a 75-mile offshore pipeline. The company also has interests in Mars pipeline system that is approximately 163 miles that delivers production received from the Mississippi Canyon area and Green Canyon and Walker Ridge to salt dome caverns in Clovelly, Louisiana; and a 105-mile Odyssey pipeline system, which transports crude oil in the offshore eastern Gulf of Mexico to markets in Louisiana. In addition, it has interests in a 367-mile Gulf of Mexico offshore pipeline that transports crude oil to Texas and Louisiana; a 70-mile crude oil pipeline that provides transportation for various oil producers in the eastern Gulf of Mexico; and a 89-mile crude oil Endymion pipeline system that offers transportation for various oil producers in the eastern Gulf of Mexico. In addition, it holds interests in Mars pipeline system that is approximately 163 miles that delivers production received from the Mississippi Canyon area and Green Canyon and Walker Ridge to salt dome caverns in Clovelly, Louisiana. The company's refined products pipeline systems consist of 160-mile Bengal pipeline system connecting four refineries in southern Louisiana to long-haul transportation pipelines; approximately 5,500 miles of pipeline connecting refineries along the Gulf Coast to approximately 265 marketing terminals; and Explorer pipeline system, an 1,830-mile common carrier petroleum products pipeline system, which extends from the Gulf Coast to the Midwest. Shell Midstream Partners GP LLC serves as the general partner of Shell Midstream Partners, L.P. The company was founded in 2014 and is based in Houston, Texas. Shell Midstream Partners, L.P. operates as a subsidiary of Shell Pipeline Company LP.

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