Financial Analysis: AltaGas (OTCMKTS:ATGFF) and Mplx (NYSE:MPLX)

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

Dividends

AltaGas pays an annual dividend of $1.50 per share and has a dividend yield of 6.0%. Mplx pays an annual dividend of $3.40 per share and has a dividend yield of 8.0%. 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 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. Mplx is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings and target prices for AltaGas and Mplx, as reported by MarketBeat.

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

Mplx has a consensus target price of $46.33, suggesting a potential upside of 8.73%. Given Mplx’s higher probable upside, analysts clearly believe Mplx is more favorable than AltaGas.

Institutional and Insider Ownership

28.7% of AltaGas shares are held by institutional investors. Comparatively, 24.3% of Mplx shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares AltaGas and Mplx’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AltaGas	N/A	N/A	N/A	$1.10	22.96
Mplx	$10.68 billion	4.06	$3.93 billion	$3.88	10.98

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.

Profitability

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

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

Summary

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

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.

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.