Head-To-Head Contrast: Midcoast Energy Partners (MEP) versus Arc Logistic Partners (ARCX)

Midcoast Energy Partners (NYSE: MEP) and Arc Logistic Partners (NYSE:ARCX) are both energy companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, risk, valuation, profitabiliy, analyst recommendations, earnings and dividends.

Insider & Institutional Ownership

64.7% of Midcoast Energy Partners shares are held by institutional investors. Comparatively, 43.3% of Arc Logistic Partners 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.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Midcoast Energy Partners and Arc Logistic Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Midcoast Energy Partners 0 1 0 0 2.00
Arc Logistic Partners 0 2 1 0 2.33

Midcoast Energy Partners currently has a consensus target price of $8.00, indicating a potential upside of 0.63%. Arc Logistic Partners has a consensus target price of $18.00, indicating a potential upside of 20.60%. Given Arc Logistic Partners’ stronger consensus rating and higher probable upside, analysts clearly believe Arc Logistic Partners is more favorable than Midcoast Energy Partners.

Valuation and Earnings

This table compares Midcoast Energy Partners and Arc Logistic Partners’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Midcoast Energy Partners N/A N/A N/A ($1.76) -4.52
Arc Logistic Partners $105.24 million 2.77 $53.31 million $0.78 19.14

Arc Logistic Partners has higher revenue and earnings than Midcoast Energy Partners. Midcoast Energy Partners is trading at a lower price-to-earnings ratio than Arc Logistic Partners, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Midcoast Energy Partners has a beta of 2.53, indicating that its share price is 153% more volatile than the S&P 500. Comparatively, Arc Logistic Partners has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500.

Profitability

This table compares Midcoast Energy Partners and Arc Logistic Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Midcoast Energy Partners -5.25% -34.51% -2.64%
Arc Logistic Partners 14.48% 4.38% 2.48%

Dividends

Midcoast Energy Partners pays an annual dividend of $1.43 per share and has a dividend yield of 18.0%. Arc Logistic Partners pays an annual dividend of $1.76 per share and has a dividend yield of 11.8%. Midcoast Energy Partners pays out -81.2% of its earnings in the form of a dividend. Arc Logistic Partners pays out 225.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Midcoast Energy Partners has raised its dividend for 2 consecutive years and Arc Logistic Partners has raised its dividend for 2 consecutive years. Midcoast Energy Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Arc Logistic Partners beats Midcoast Energy Partners on 8 of the 12 factors compared between the two stocks.

Midcoast Energy Partners Company Profile

Midcoast Energy Partners, L.P. (MEP) is a limited partnership company that is engaged in the natural gas and natural gas liquids (NGL) midstream business. It operates through two segments: Gathering, Processing and Transportation, and Logistics and Marketing. It also provides marketing services of natural gas and NGLs to wholesale customers. The Company’s gathering, processing and transportation business includes natural gas and NGL gathering and transportation pipeline systems, natural gas processing and treating facilities, condensate stabilizers and an NGL fractionation facility. Its logistics and marketing business provides marketing services of natural gas, NGLs and condensate received from its gathering, processing and transportation business. The Company holds interest in Midcoast Operating, L.P., a Texas limited partnership that owns a network of natural gas and NGL gathering and transportation systems, natural gas processing and treating facilities.

Arc Logistic Partners Company Profile

Arc Logistics Partners LP owns, operates, develops and acquires a portfolio of energy logistics assets. The Company is engaged in the terminaling, storage, throughput and transloading of crude oil and petroleum products. The Company is focused on growing its business through the optimization, organic development and acquisition of terminaling, storage, rail, pipeline and other energy logistics assets. As of March 6, 2017, the Company’s energy logistics assets were located in the East Coast, Gulf Coast, Midwest, Rocky Mountains and West Coast regions of the United States and supplied a group of third-party customers, including oil companies, independent refiners, crude oil and petroleum product marketers, distributors and various industrial manufacturers. As of December 31, 2016, its assets consisted of 21 terminals in 12 states; four rail transloading facilities, and the liquefied natural gas (LNG) Interest in connection with the LNG Facility.

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