Head-To-Head Review: Tallgrass Energy (TGE) versus Tallgrass Energy GP (TEGP)

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

Dividends

Tallgrass Energy pays an annual dividend of $1.99 per share and has a dividend yield of 8.2%. Tallgrass Energy GP pays an annual dividend of $1.95 per share and has a dividend yield of 8.8%. Tallgrass Energy pays out 261.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy GP pays out 256.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tallgrass Energy GP has increased its dividend for 2 consecutive years. Tallgrass Energy GP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.



Institutional and Insider Ownership

39.4% of Tallgrass Energy shares are held by institutional investors. Comparatively, 31.8% of Tallgrass Energy GP shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Tallgrass Energy -18.21% 2.03% 0.87%
Tallgrass Energy GP -17.96% 2.54% 1.09%

Earnings and Valuation

This table compares Tallgrass Energy and Tallgrass Energy GP’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tallgrass Energy $655.90 million 5.72 -$128.72 million $0.76 31.89
Tallgrass Energy GP $655.90 million 6.24 -$128.72 million $0.76 29.16

Tallgrass Energy GP is trading at a lower price-to-earnings ratio than Tallgrass Energy, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Tallgrass Energy and Tallgrass Energy GP, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tallgrass Energy 0 1 1 0 2.50
Tallgrass Energy GP 1 2 3 0 2.33

Tallgrass Energy currently has a consensus price target of $26.00, indicating a potential upside of 7.26%. Tallgrass Energy GP has a consensus price target of $23.17, indicating a potential upside of 4.54%. Given Tallgrass Energy’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Tallgrass Energy is more favorable than Tallgrass Energy GP.

Volatility & Risk

Tallgrass Energy has a beta of 1.9, suggesting that its stock price is 90% more volatile than the S&P 500. Comparatively, Tallgrass Energy GP has a beta of 1.88, suggesting that its stock price is 88% more volatile than the S&P 500.

Summary

Tallgrass Energy GP beats Tallgrass Energy on 8 of the 13 factors compared between the two stocks.

About Tallgrass Energy

Tallgrass Energy, 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. The company was formerly known as Tallgrass Energy GP, LP and changed its name to Tallgrass Energy, LP in June 2018. Tallgrass Energy, LP was founded in 2013 and is based in Leawood, Kansas.

About Tallgrass Energy GP

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.

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