Critical Comparison: SemGroup (SEMG) versus Noble Midstream Partners (NBLX)

SemGroup (NYSE: SEMG) and Noble Midstream Partners (NYSE:NBLX) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.

Dividends

SemGroup pays an annual dividend of $1.80 per share and has a dividend yield of 6.6%. Noble Midstream Partners pays an annual dividend of $1.95 per share and has a dividend yield of 3.7%. SemGroup pays out -2,250.0% of its earnings in the form of a dividend. Noble Midstream Partners pays out 52.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. SemGroup is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares SemGroup and Noble Midstream Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SemGroup $1.33 billion 1.60 $2.09 million ($0.08) -338.75
Noble Midstream Partners $160.72 million 7.70 $74.44 million $3.70 14.40

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

Profitability

This table compares SemGroup and Noble Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SemGroup -0.41% 5.96% 2.40%
Noble Midstream Partners 55.83% 36.74% 24.51%

Institutional & Insider Ownership

76.1% of Noble Midstream Partners shares are owned by institutional investors. 0.8% of SemGroup shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for SemGroup and Noble Midstream Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SemGroup 0 4 3 0 2.43
Noble Midstream Partners 0 1 6 0 2.86

SemGroup presently has a consensus target price of $30.60, suggesting a potential upside of 12.92%. Noble Midstream Partners has a consensus target price of $56.83, suggesting a potential upside of 6.69%. Given SemGroup’s higher probable upside, equities analysts clearly believe SemGroup is more favorable than Noble Midstream Partners.

Volatility and Risk

SemGroup has a beta of 1.84, suggesting that its share price is 84% more volatile than the S&P 500. Comparatively, Noble Midstream Partners has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500.

Summary

Noble Midstream Partners beats SemGroup on 10 of the 16 factors compared between the two stocks.

About SemGroup

SemGroup Corporation is a provider of gathering, transportation, storage, distribution, marketing and other midstream services to producers, refiners of petroleum products and other market participants located in the Midwest and Rocky Mountain regions of the United States and Canada. The Company’s segments include Crude Transportation, which operates crude oil pipelines and truck transportation businesses in the United States; Crude Facilities, which operates crude oil storage and terminal businesses in the United States; Crude Supply and Logistics, which operates a crude oil marketing business; SemGas, which provides natural gas gathering and processing services; SemCAMS, which operates natural gas processing and gathering facilities in Alberta, Canada; SemLogistics, which owns petroleum products storage facility in the United Kingdom, and SemMexico, which provides liquid asphalt cement products and product application services to the Mexican market, and Corporate and Other.

About Noble Midstream Partners

Noble Midstream Partners LP is engaged in owning, operating, developing and acquiring a range of domestic midstream infrastructure assets. The Company’s areas of focus are in the area of Denver-Julesburg (DJ) Basin in Colorado and the Southern Delaware Basin position of the Permian Basin in Texas (Delaware Basin). Its segments include Gathering Systems, Fresh Water Delivery, and Investments in White Cliffs and Other. The Gathering Systems segment includes crude oil, natural gas and produced water gathering, as well as crude oil treating. It holds interest in White Cliffs Pipeline L.L.C. (the White Cliffs Interest). The Investments in White Cliffs and Other segment includes activity associated with the White Cliffs Interest. As of December 31, 2016, the White Cliffs Pipeline system consisted of two 527-mile crude oil pipelines that extended from the DJ Basin to the Cushing, Oklahoma. It provides crude oil, natural gas, and water-related midstream services for Noble Energy, Inc.

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