TransCanada (NYSE: TRP) and Enbridge (NYSE:ENB) are both large-cap energy companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, risk, analyst recommendations, valuation, institutional ownership and profitability.
Earnings and Valuation
This table compares TransCanada and Enbridge’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|TransCanada||$9.44 billion||4.45||$175.96 million||$1.61||29.73|
|Enbridge||$25.89 billion||2.54||$1.56 billion||$1.56||25.47|
This is a summary of recent ratings and target prices for TransCanada and Enbridge, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
TransCanada currently has a consensus target price of $60.00, indicating a potential upside of 25.37%. Enbridge has a consensus target price of $52.00, indicating a potential upside of 30.85%. Given Enbridge’s higher probable upside, analysts clearly believe Enbridge is more favorable than TransCanada.
TransCanada pays an annual dividend of $1.96 per share and has a dividend yield of 4.1%. Enbridge pays an annual dividend of $1.92 per share and has a dividend yield of 4.8%. TransCanada pays out 121.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Enbridge pays out 123.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TransCanada has increased its dividend for 6 consecutive years and Enbridge has increased its dividend for 2 consecutive years.
This table compares TransCanada and Enbridge’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk & Volatility
TransCanada has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, Enbridge has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.
Institutional & Insider Ownership
56.9% of TransCanada shares are owned by institutional investors. Comparatively, 62.1% of Enbridge shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
TransCanada beats Enbridge on 11 of the 16 factors compared between the two stocks.
TransCanada Corporation is an energy infrastructure company. The Company is engaged in the development and operation of North American energy infrastructure, including natural gas and liquids pipelines, power generation and natural gas storage facilities. Its segments include Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines and Energy. The Company operates in three businesses: Natural Gas Pipelines, Liquids Pipelines and Energy. The Natural Gas Pipelines and Liquids Pipelines segments principally consist of its respective natural gas and liquids pipelines in Canada, the United States and Mexico, as well as its regulated natural gas storage operations in the United States. The Energy segment includes its power operations and the non-regulated natural gas storage business in Canada. TransCanada PipeLines Limited (TCPL) is its principal operating subsidiary.
Enbridge Inc. is a Canada-based energy transportation and distribution company. The Company is engaged in delivering energy. It operates through five segments: Liquids Pipelines, Gas Distribution, Gas Pipelines and Processing, Green Power and Transmission, and Energy Services. Liquids Pipelines consists of common carrier and contract crude oil, natural gas liquids (NGL), and refined products pipelines and terminals, including Canadian Mainline, Lakehead Pipeline System, Mid-Continent and Gulf Coast and Regional Oil Sands System. Gas Distribution consists of its natural gas utility operations, the core of which is Enbridge Gas Distribution Inc. Green Power and Transmission consists of its investments in renewable energy assets and transmission facilities. Renewable energy assets consist of wind, solar, geothermal and waste heat recovery facilities in Canada. Energy Services undertake physical commodity marketing activity and logistical services, and oversee refinery supply services.
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