Kinder Morgan (NYSE: KMI) and Buckeye Partners (NYSE:BPL) are both mid-cap energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, risk, valuation and profitability.

Insider and Institutional Ownership

60.8% of Kinder Morgan shares are held by institutional investors. Comparatively, 70.2% of Buckeye Partners shares are held by institutional investors. 14.0% of Kinder Morgan shares are held by insiders. Comparatively, 0.4% of Buckeye Partners shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Kinder Morgan has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500. Comparatively, Buckeye Partners has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Kinder Morgan and Buckeye Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kinder Morgan 0 10 8 0 2.44
Buckeye Partners 1 7 2 0 2.10

Kinder Morgan presently has a consensus target price of $22.73, indicating a potential upside of 19.59%. Buckeye Partners has a consensus target price of $65.00, indicating a potential upside of 18.14%. Given Kinder Morgan’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Kinder Morgan is more favorable than Buckeye Partners.

Profitability

This table compares Kinder Morgan and Buckeye Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kinder Morgan 1.34% 4.38% 1.96%
Buckeye Partners 12.69% 9.72% 4.69%

Earnings & Valuation

This table compares Kinder Morgan and Buckeye Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kinder Morgan $13.71 billion 3.10 $708.00 million $0.01 1,901.00
Buckeye Partners $3.25 billion 2.48 $535.60 million $3.27 16.83

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

Dividends

Kinder Morgan pays an annual dividend of $0.50 per share and has a dividend yield of 2.6%. Buckeye Partners pays an annual dividend of $5.05 per share and has a dividend yield of 9.2%. Kinder Morgan pays out 5,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Buckeye Partners pays out 154.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Buckeye Partners has raised its dividend for 15 consecutive years. Buckeye Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Buckeye Partners beats Kinder Morgan on 9 of the 17 factors compared between the two stocks.

About Kinder Morgan

Kinder Morgan, Inc. is an energy infrastructure company. It operates through five segments. Its Natural Gas Pipelines segment is engaged in the ownership and operation of interstate and intrastate natural gas pipeline and storage systems, and liquefied natural gas facilities, among others. Its CO2 segment is engaged in the production, transportation and marketing of carbon dioxide (CO2) to oil fields and the ownership and operation of a crude oil pipeline system, among others. Its Terminals segment is engaged in the ownership and/or operation of liquids and bulk terminal facilities located throughout the United States and portions of Canada, and Jones Act tankers. Its Products Pipelines segment is engaged in the ownership and operation of refined petroleum products, natural gas liquids and crude oil and condensate pipelines. Its Kinder Morgan Canada segment is engaged in the ownership and operation of the Trans Mountain pipeline system and Jet Fuel aviation turbine fuel pipeline.

About Buckeye Partners

Buckeye Partners, L.P. (Buckeye) owns and operates a network of integrated assets providing midstream logistic solutions, primarily consisting of the transportation, storage, processing and marketing of liquid petroleum products. Its segments include Domestic Pipelines & Terminals, Global Marine Terminals and Merchant Services. As of December 31, 2016, the Domestic Pipelines & Terminals segment owned and operated approximately 6,000 miles of pipeline located primarily in the northeastern and upper Midwestern portions of the United States, and serviced approximately 110 delivery locations. The Global Marine Terminals segment provides marine accessible bulk storage and blending services, rail and truck rack loading/unloading, along with petroleum processing services in the East Coast and Gulf Coast regions of the United States and in the Caribbean. The Merchant Services segment is a wholesale distributor of petroleum products in the continental United States and in the Caribbean.

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