AltaGas (OTCMKTS:ATGFF) versus Mplx (NYSE:MPLX) Critical Analysis

Mplx (NYSE:MPLX) and AltaGas (OTCMKTS:ATGFF) are both oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, institutional ownership, risk, earnings, profitability, analyst recommendations and valuation.

Institutional and Insider Ownership

24.3% of Mplx shares are owned by institutional investors. Comparatively, 28.7% of AltaGas shares are owned 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.

Dividends

Mplx pays an annual dividend of $3.40 per share and has a dividend yield of 8.0%. AltaGas pays an annual dividend of $1.50 per share and has a dividend yield of 5.9%. Mplx pays out 87.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AltaGas pays out 136.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mplx is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Mplx and AltaGas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mplx	0	0	9	0	3.00
AltaGas	0	0	0	0	N/A

Mplx currently has a consensus target price of $46.33, indicating a potential upside of 9.19%. AltaGas has a consensus target price of $0.00, indicating a potential downside of 100.00%. Given Mplx’s higher possible upside, analysts clearly believe Mplx is more favorable than AltaGas.

Profitability

This table compares Mplx and AltaGas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mplx	35.95%	32.68%	11.48%
AltaGas	N/A	N/A	N/A

Earnings & Valuation

This table compares Mplx and AltaGas’ revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mplx	$10.68 billion	4.04	$3.93 billion	$3.88	10.94
AltaGas	N/A	N/A	N/A	$1.10	23.07

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

Summary

Mplx beats AltaGas on 9 of the 11 factors compared between the two stocks.

About Mplx

MPLX LP owns and operates midstream energy infrastructure and logistics assets primarily in the United States. It operates in two segments, Logistics and Storage, and Gathering and Processing. The company is involved in the gathering, processing, and transportation of natural gas; gathering, transportation, fractionation, storage, and marketing of natural gas liquids; gathering, storage, transportation, and distribution of crude oil and refined products, as well as other hydrocarbon-based products and renewables; and sale of residue gas and condensate. It also engages in the inland marine businesses comprising fleet of boats and barges transportation of light products, heavy oils, crude oil, renewable fuels, chemicals, and feedstocks in the Mid-Continent and Gulf Coast regions, as well as a marine repair facility located on the Ohio River; and distribution of fuel, as well as operates refining logistics, terminals, rail facilities, and storage caverns. In addition, the company operates terminal facilities for the receipt, storage, blending, additization, handling, and redelivery of refined petroleum products through the pipeline, rail, marine, and over-the-road modes of transportation. MPLX GP LLC acts as the general partner of MPLX LP. The company was incorporated in 2012 and is headquartered in Findlay, Ohio. MPLX LP operates as a subsidiary of Marathon Petroleum Corporation.

About AltaGas

AltaGas Ltd. operates as an energy infrastructure company in North America. The company operates through Utilities and Midstream segments. The Utilities segment owns and operates franchised, cost-of-service, rate-regulated natural gas distribution and storage utilities in Maryland, Virginia, Delaware, Pennsylvania, Ohio, and the District of Columbia serving approximately 1.6 million customers. This segment also provides interstate natural gas transportation and storage services. The Midstream segment engages in the natural gas gathering, processing, and extraction with 1.2 billion cubic feet per day (Bcf/d) of extraction processing capacity and approximately 1.2 Bcf/d of raw field gas processing capacity; fractionation and liquids handling business; and natural gas and natural gas liquids marketing activities. It also engages in LPG exports and distribution, logistics, trucking and rail terminals, and liquid storage businesses. In addition, the company operates gas-fired power generation and distribution assets with a generating capacity of 508 megawatt of power in California. It serves residential, commercial, and industrial customers. AltaGas Ltd. was founded in 1994 and is headquartered in Calgary, Canada.