Analyzing Kinetik (NASDAQ:KNTK) and USA Compression Partners (NYSE:USAC)

Kinetik (NASDAQ:KNTKGet Rating) and USA Compression Partners (NYSE:USACGet Rating) are both oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, valuation and earnings.

Earnings & Valuation

This table compares Kinetik and USA Compression Partners’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kinetik $160.62 million 22.26 $99.22 million $5.13 14.16
USA Compression Partners $632.65 million 3.03 $10.28 million ($0.39) -50.49

Kinetik has higher earnings, but lower revenue than USA Compression Partners. USA Compression Partners is trading at a lower price-to-earnings ratio than Kinetik, indicating that it is currently the more affordable of the two stocks.

Dividends

Kinetik pays an annual dividend of $6.00 per share and has a dividend yield of 8.3%. USA Compression Partners pays an annual dividend of $2.10 per share and has a dividend yield of 10.7%. Kinetik pays out 117.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. USA Compression Partners pays out -538.4% of its earnings in the form of a dividend. USA Compression Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Kinetik and USA Compression Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kinetik 25.18% -11.27% 2.94%
USA Compression Partners 1.62% 5.48% 0.36%

Insider and Institutional Ownership

11.5% of Kinetik shares are owned by institutional investors. Comparatively, 22.2% of USA Compression Partners shares are owned by institutional investors. 0.9% of Kinetik shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations for Kinetik and USA Compression Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kinetik 0 0 3 0 3.00
USA Compression Partners 2 0 0 0 1.00

Kinetik presently has a consensus price target of $74.00, indicating a potential upside of 1.90%. USA Compression Partners has a consensus price target of $16.00, indicating a potential downside of 18.74%. Given Kinetik’s stronger consensus rating and higher possible upside, analysts clearly believe Kinetik is more favorable than USA Compression Partners.

Risk and Volatility

Kinetik has a beta of 3.28, meaning that its share price is 228% more volatile than the S&P 500. Comparatively, USA Compression Partners has a beta of 2.01, meaning that its share price is 101% more volatile than the S&P 500.

Summary

Kinetik beats USA Compression Partners on 11 of the 16 factors compared between the two stocks.

About Kinetik (Get Rating)

Kinetik Holdings Inc. operates as a midstream company in the Texas Delaware Basin. It provides gathering, transportation, compression, processing, and treating services for companies that produce natural gas, natural gas liquids, crude oil, and water. The company is headquartered in Midland, Texas.

About USA Compression Partners (Get Rating)

USA Compression Partners, LP provides compression services under term contracts with customers in the natural gas and crude oil industries in the United States. The company engineers, designs, operates, services, and repairs its compression units; and maintains related support inventory and equipment. It also provides compression services in various shale plays, including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales. As of December 31, 2017, the company had approximately 1,799,781 horsepower in its fleet. It serves oil companies; and independent producers, processors, gatherers, and transporters of natural gas and crude oil. USA Compression GP, LLC operates as the general partner of USA Compression Partners, LP. The company was formerly known as Compression Holdings, LP, and changed its name to USA Compression Partners, LP in June 2011. USA Compression Partners, LP was founded in 1998 and is headquartered in Austin, Texas.

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