Head-To-Head Review: Tallgrass Energy GP (TEGP) vs. DCP Midstream (DCP)

Tallgrass Energy GP (NYSE: DCP) and DCP Midstream (NYSE:DCP) are both mid-cap oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, valuation, earnings, risk and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for Tallgrass Energy GP and DCP Midstream, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tallgrass Energy GP 1 2 3 0 2.33
DCP Midstream 2 4 6 0 2.33

Tallgrass Energy GP currently has a consensus price target of $23.17, indicating a potential upside of 5.69%. DCP Midstream has a consensus price target of $41.64, indicating a potential downside of 3.46%. Given Tallgrass Energy GP’s higher possible upside, analysts clearly believe Tallgrass Energy GP is more favorable than DCP Midstream.

Risk and Volatility

Tallgrass Energy GP has a beta of 1.88, indicating that its share price is 88% more volatile than the S&P 500. Comparatively, DCP Midstream has a beta of 2.35, indicating that its share price is 135% more volatile than the S&P 500.

Dividends

Tallgrass Energy GP pays an annual dividend of $1.95 per share and has a dividend yield of 8.9%. DCP Midstream pays an annual dividend of $3.12 per share and has a dividend yield of 7.2%. Tallgrass Energy GP pays out 256.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DCP Midstream pays out 588.7% 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 2 consecutive years. Tallgrass Energy GP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Tallgrass Energy GP -17.96% 2.54% 1.09%
DCP Midstream 1.84% 3.07% 1.52%

Institutional & Insider Ownership

31.8% of Tallgrass Energy GP shares are owned by institutional investors. Comparatively, 55.2% of DCP Midstream shares are owned by institutional investors. 0.0% of DCP Midstream shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Tallgrass Energy GP and DCP Midstream’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tallgrass Energy GP $655.90 million 6.18 -$128.72 million $0.76 28.84
DCP Midstream $8.46 billion 0.73 $229.00 million $0.53 81.38

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

Summary

DCP Midstream beats Tallgrass Energy GP on 10 of the 16 factors compared between the two stocks.

Tallgrass Energy GP Company Profile

Tallgrass Energy GP, 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. Tallgrass Energy GP, LP was founded in 2013 and is based in Leawood, Kansas.

DCP Midstream Company Profile

DCP Midstream LP engages in the business of gathering, compressing, treating, processing, transporting, storing and selling natural gas; producing, fractionating, transporting, storing and selling natural gas liquids (NGLs) and condensate; and transporting, storing and selling propane in wholesale markets. It operates through three segments: Gathering & Processing powerhouse, Logistics & Marketing, and Growth Projects. The Gathering & Processing powerhouse segment engages in gathering and processing of raw gas to make it marketable. The Logistics & Marketing segment consists of multiple downstream assets including fractionators, NGL pipelines, and NGL storage facilities. The Growth Projects segment includes Mewbourn 3, which is a cryogenic natural gas processing plant in the DJ Basin. The company was founded in August 2005 and is headquartered in Denver, CO.

Receive News & Ratings for Tallgrass Energy GP Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Tallgrass Energy GP and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply