Tallgrass Energy GP (NYSE: TEGP) and Enbridge Energy Partners (NYSE:EEP) are both mid-cap energy companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, earnings, risk, dividends, valuation, analyst recommendations and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for Tallgrass Energy GP and Enbridge Energy Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tallgrass Energy GP 0 4 4 0 2.50
Enbridge Energy Partners 0 9 2 0 2.18

Tallgrass Energy GP currently has a consensus price target of $31.13, suggesting a potential upside of 26.42%. Enbridge Energy Partners has a consensus price target of $18.63, suggesting a potential upside of 34.87%. Given Enbridge Energy Partners’ higher possible upside, analysts clearly believe Enbridge Energy Partners is more favorable than Tallgrass Energy GP.

Institutional & Insider Ownership

36.3% of Tallgrass Energy GP shares are held by institutional investors. Comparatively, 44.9% of Enbridge Energy Partners shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Tallgrass Energy GP and Enbridge Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tallgrass Energy GP 7.07% 2.46% 1.12%
Enbridge Energy Partners 8.47% 6.03% 1.93%

Dividends

Tallgrass Energy GP pays an annual dividend of $1.37 per share and has a dividend yield of 5.6%. Enbridge Energy Partners pays an annual dividend of $1.40 per share and has a dividend yield of 10.1%. Tallgrass Energy GP pays out 171.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Enbridge Energy Partners pays out 186.7% 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 GP has increased its dividend for 7 consecutive years.

Earnings & Valuation

This table compares Tallgrass Energy GP and Enbridge Energy Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tallgrass Energy GP $605.12 million 6.40 $26.79 million $0.80 30.78
Enbridge Energy Partners $4.48 billion 1.01 -$67.70 million $0.75 18.41

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

Summary

Tallgrass Energy GP beats Enbridge Energy Partners on 8 of the 15 factors compared between the two stocks.

About Tallgrass Energy GP

Tallgrass Energy GP, LP is a limited partnership company, which includes the operations of Tallgrass Equity, LLC (Tallgrass Equity), Tallgrass MLP GP, LLC, Tallgrass Energy Partners, LP (TEP), and TEP’s subsidiaries. TEP owns, operates, acquires and develops midstream energy assets in North America. TEP’s segments include Crude Oil Transportation & Logistics, which is engaged in the ownership and operation of a crude oil pipeline system, and crude oil storage and terminaling facilities; Natural Gas Transportation & Logistics, which is engaged in the ownership and operation of interstate natural gas pipelines and integrated natural gas storage facilities; Processing & Logistics, which is engaged in the ownership and operation of natural gas processing, treating and fractionation facilities, and the provision of water business services to the oil and gas exploration and production industry, and Corporate and Other.

About Enbridge Energy Partners

Enbridge Energy Partners, L.P is a geographically and operationally diversified organization that provides crude oil and liquid petroleum gathering and transportation and storage services. The Company operates through the Liquids business segment. Its Liquids segment includes the operations of its Lakehead, North Dakota and mid-continent systems. The Company’s Lakehead system along with the Enbridge system formed the Mainline system, together formed the liquid petroleum pipeline system, as of December 31, 2016. The Mainline system serves refining centers in the Great Lakes and Midwest regions of the United States and the provinces of Ontario and Quebec, Canada. The Lakehead system is the United States portion of the Mainline system.

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