Contrasting Tallgrass Energy GP (NYSE:TEGP) and Kinder Morgan (NYSE:KMI)

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Tallgrass Energy GP (NYSE:TEGP) and Kinder Morgan (NYSE:KMI) are both oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, dividends, earnings, risk, valuation, analyst recommendations and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Tallgrass Energy GP N/A N/A N/A
Kinder Morgan 11.59% 6.13% 2.72%

Dividends

Tallgrass Energy GP pays an annual dividend of $1.95 per share and has a dividend yield of 8.8%. Kinder Morgan pays an annual dividend of $1.00 per share and has a dividend yield of 4.9%. Kinder Morgan pays out 112.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy GP has increased its dividend for 3 consecutive years. Tallgrass Energy GP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Tallgrass Energy GP and Kinder Morgan’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tallgrass Energy GP N/A N/A N/A N/A N/A
Kinder Morgan $14.14 billion 3.26 $1.61 billion $0.89 22.85

Kinder Morgan has higher revenue and earnings than Tallgrass Energy GP.

Analyst Recommendations

This is a summary of current ratings and price targets for Tallgrass Energy GP and Kinder Morgan, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tallgrass Energy GP 0 0 1 0 3.00
Kinder Morgan 1 5 10 0 2.56

Tallgrass Energy GP presently has a consensus price target of $24.00, indicating a potential upside of 8.30%. Kinder Morgan has a consensus price target of $21.70, indicating a potential upside of 7.00%. Given Tallgrass Energy GP’s stronger consensus rating and higher possible upside, analysts clearly believe Tallgrass Energy GP is more favorable than Kinder Morgan.

Institutional & Insider Ownership

31.8% of Tallgrass Energy GP shares are owned by institutional investors. Comparatively, 62.6% of Kinder Morgan shares are owned by institutional investors. 14.0% of Kinder Morgan shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Kinder Morgan beats Tallgrass Energy GP on 7 of the 12 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.

Kinder Morgan Company Profile

Kinder Morgan, Inc. operates as an energy infrastructure company in North America. The company operates through Natural Gas Pipelines, Products Pipelines, Terminals, and CO2 segments. The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipeline and storage systems; natural gas and crude oil gathering systems, and natural gas processing and treating facilities; natural gas liquids (NGL) fractionation facilities and transportation systems; and liquefied natural gas facilities. The Products Pipelines segment owns and operates refined petroleum products, NGL, and crude oil and condensate pipelines; and associated product terminals and petroleum pipeline transmix facilities. The Terminals segment owns and/or operates liquids and bulk terminals that transload and store refined petroleum products, crude oil, ethanol, and chemicals, as well as bulk products, including coke, metals, and ores; and owns tankers. The CO2 segment produces, transports, and markets CO2 to recovery and production crude oil from mature oil fields; and owns interests in/or operates oil fields and gas processing plants, as well as operates a crude oil pipeline system in West Texas. The company owns an interest in or operates approximately 84,000 miles of pipelines and 153 terminals. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan, Inc. in February 2011. Kinder Morgan, Inc. was founded in 1936 and is headquartered in Houston, Texas.

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