Reviewing DCP Midstream (DCP) and Antero Midstream GP (AMGP)

Opinions

Editorial Staff Wcryptn

Date: 01.08.2018

DCP Midstream (NYSE: DCP) and Antero Midstream GP (NYSE:AMGP) 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 valuation, earnings, analyst recommendations, institutional ownership, profitability, dividends and risk.

Earnings & Valuation

This table compares DCP Midstream and Antero Midstream GP’s revenue, earnings per share and valuation.

  Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DCP Midstream $8.46 billion 0.75 $229.00 million $0.53 83.36
Antero Midstream GP $69.72 million 51.44 $2.32 million $0.03 642.00
 

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

Dividends

DCP Midstream pays an annual dividend of $3.12 per share and has a dividend yield of 7.1%. Antero Midstream GP pays an annual dividend of $0.43 per share and has a dividend yield of 2.2%. 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. Antero Midstream GP pays out 1,433.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DCP Midstream is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations for DCP Midstream and Antero Midstream GP, as reported by MarketBeat.com.

  Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DCP Midstream 2 5 5 0 2.25
Antero Midstream GP 0 5 6 0 2.55

DCP Midstream currently has a consensus price target of $39.73, suggesting a potential downside of 10.08%. Antero Midstream GP has a consensus price target of $22.70, suggesting a potential upside of 17.86%. Given Antero Midstream GP’s stronger consensus rating and higher probable upside, analysts clearly believe Antero Midstream GP is more favorable than DCP Midstream.

Risk and Volatility

DCP Midstream has a beta of 2.22, suggesting that its share price is 122% more volatile than the S&P 500. Comparatively, Antero Midstream GP has a beta of 2.12, suggesting that its share price is 112% more volatile than the S&P 500.

Insider & Institutional Ownership

54.4% of DCP Midstream shares are held by institutional investors. Comparatively, 74.7% of Antero Midstream GP shares are held by institutional investors. 0.0% of DCP Midstream shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

  Net Margins Return on Equity Return on Assets
DCP Midstream 2.24% 3.08% 1.57%
Antero Midstream GP 21.79% 116.75% 62.16%

Summary

Antero Midstream GP beats DCP Midstream on 9 of the 16 factors compared between the two stocks.

About DCP Midstream

DCP Midstream, LP, together with its subsidiaries, owns, operates, acquires, and develops a portfolio of midstream energy assets in the United States. The company operates in two segments, Gathering and Processing, and Logistics and Marketing. The Gathering and Processing segment is involved in gathering, compressing, treating, and processing natural gas; producing and fractionating natural gas liquids (NGLs); and recovering condensate. The Logistics and Marketing segment engages in transporting, trading, marketing, and storing natural gas and NGLs; fractionating NGLs; and wholesale propane logistics. As of February 13, 2018, it owned and operated approximately 60 plants and 63,000 miles of natural gas and NGLs pipelines with operations in 17 states. The company serves petrochemical and refining companies, and retail propane distributors. DCP Midstream GP, LP serves as the general partner of the company. The company was formerly known as DCP Midstream Partners, LP and changed its name to DCP Midstream, LP in January 2017. DCP Midstream, LP was founded in 2005 and is headquartered in Denver, Colorado.

About Antero Midstream GP

Antero Midstream GP LP owns, operates, and develops midstream energy assets in the Marcellus and Utica Shales in West Virginia and Ohio. Its assets consist of gathering pipelines, compressor stations, interests in processing and fractionation plants, and water handling and treatment assets, which provide midstream services to Antero Resources Corporation under long term fixed fee contracts. The company was formerly known as Antero Resources Midstream Management LLC and changed its name to Antero Midstream GP LP in May 2017. Antero Midstream GP LP was founded in 2013 and is based in Denver, Colorado.

 

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