Head-To-Head Contrast: Tallgrass Energy GP (TEGP) vs. Enbridge Energy Partners (EEP)

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

Institutional and Insider Ownership

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

Profitability

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

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Enbridge Energy Partners and Tallgrass Energy GP, as reported by MarketBeat.

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

Enbridge Energy Partners currently has a consensus target price of $18.63, suggesting a potential upside of 33.23%. Tallgrass Energy GP has a consensus target price of $31.13, suggesting a potential upside of 25.76%. Given Enbridge Energy Partners’ higher possible upside, equities research analysts clearly believe Enbridge Energy Partners is more favorable than Tallgrass Energy GP.

Dividends

Enbridge Energy Partners pays an annual dividend of $1.40 per share and has a dividend yield of 10.0%. Tallgrass Energy GP pays an annual dividend of $1.37 per share and has a dividend yield of 5.5%. Enbridge Energy Partners pays out 222.2% 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 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 has increased its dividend for 7 consecutive years. Enbridge Energy Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Enbridge Energy Partners $4.48 billion 1.02 -$67.70 million $0.63 22.19
Tallgrass Energy GP $605.12 million 6.43 $26.79 million $0.80 30.94

Tallgrass Energy GP has lower revenue, but higher earnings 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

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

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.

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.

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