Comparing Dominion Energy Midstream Partners (DM) and Tallgrass Energy (TGE)

Dominion Energy Midstream Partners (NYSE:DM) and Tallgrass Energy (NYSE:TGE) are both mid-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, dividends, risk, valuation, earnings and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations and price targets for Dominion Energy Midstream Partners and Tallgrass Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dominion Energy Midstream Partners 0 10 1 0 2.09
Tallgrass Energy 0 3 4 0 2.57

Dominion Energy Midstream Partners currently has a consensus price target of $21.89, indicating a potential upside of 20.27%. Tallgrass Energy has a consensus price target of $26.83, indicating a potential upside of 24.40%. Given Tallgrass Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Tallgrass Energy is more favorable than Dominion Energy Midstream Partners.

Volatility & Risk

Dominion Energy Midstream Partners has a beta of 1.96, meaning that its stock price is 96% more volatile than the S&P 500. Comparatively, Tallgrass Energy has a beta of 1.91, meaning that its stock price is 91% more volatile than the S&P 500.

Institutional and Insider Ownership

27.6% of Dominion Energy Midstream Partners shares are owned by institutional investors. Comparatively, 24.3% of Tallgrass Energy shares are owned by institutional investors. 11.2% of Dominion Energy Midstream Partners shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Dominion Energy Midstream Partners pays an annual dividend of $1.40 per share and has a dividend yield of 7.7%. Tallgrass Energy pays an annual dividend of $1.99 per share and has a dividend yield of 9.2%. Dominion Energy Midstream Partners pays out 103.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy pays out 261.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Dominion Energy Midstream Partners and Tallgrass Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dominion Energy Midstream Partners 28.46% 2.76% 2.09%
Tallgrass Energy -18.21% 2.03% 0.87%

Earnings and Valuation

This table compares Dominion Energy Midstream Partners and Tallgrass Energy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dominion Energy Midstream Partners $480.20 million 4.80 $195.10 million $1.35 13.48
Tallgrass Energy $655.90 million 9.21 -$128.72 million $0.76 28.38

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

Summary

Dominion Energy Midstream Partners beats Tallgrass Energy on 9 of the 16 factors compared between the two stocks.

About Dominion Energy Midstream Partners

Dominion Energy Midstream Partners, LP owns liquefied natural gas (LNG) terminalling, storage, regasification, and transportation assets. It owns and operates LNG terminalling and storage facility located on the Chesapeake Bay in Lusby, Maryland. The company also operates an interstate pipeline in South Carolina and southeastern Georgia comprising natural gas system consisting of approximately 1,500 miles of transmission pipeline and 5 compressor stations with approximately 34,500 installed compressor horsepower. In addition, it owns and operates a 416-mile interstate natural gas pipeline from the United States-Canadian border at Waddington, New York through the state of Connecticut to South Commack, Long Island, New York and continuing on from Northport, Long Island, New York through the Long Island Sound to Hunts Point, Bronx, New York providing service to local gas distribution companies, electric utilities, and electric power generators, as well as marketers and other end users through interconnecting pipelines and exchanges. Further, the company operates 2,200 miles of natural gas transportation pipelines in northeastern and central Utah, northwestern Colorado, and southwestern Wyoming. Dominion Energy Midstream GP, LLC serves as a general partner of the company. The company was founded in 2000 and is headquartered in Richmond, Virginia.

About Tallgrass Energy

Tallgrass Energy, LP, through its interests in Tallgrass Equity, LLC, provides crude oil transportation services to customers in Wyoming, Colorado, and the surrounding regions of the United States. The company operates through three segments: Natural Gas Transportation; Crude Oil Transportation; and Gathering, Processing & Terminalling. It also provides natural gas transportation and storage services for customers in the Rocky Mountain, Midwest, and Appalachian regions; natural gas and crude oil gathering and processing services for customers in Wyoming; and natural gas liquids (NGLs) transportation services in Northeast Colorado and Wyoming. In addition, the company offers water business services, including freshwater transportation, and produced water gathering and disposal in Colorado, Texas, and Wyoming; crude oil storage and terminalling services in Colorado; and marketing services for NGLs and crude oil. The company was formerly known as Tallgrass Energy GP, LP and changed its name to Tallgrass Energy, LP in June 2018. Tallgrass Energy, LP was founded in 2013 and is based in Leawood, Kansas.

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