Critical Comparison: Hess Midstream (NYSE:HESM) and Ecopetrol (NYSE:EC)

Hess Midstream (NYSE:HESMGet Rating) and Ecopetrol (NYSE:ECGet Rating) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for Hess Midstream and Ecopetrol, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hess Midstream 0 5 1 0 2.17
Ecopetrol 1 2 0 0 1.67

Hess Midstream currently has a consensus price target of $30.33, indicating a potential downside of 3.52%. Ecopetrol has a consensus price target of $15.60, indicating a potential downside of 9.83%. Given Hess Midstream’s stronger consensus rating and higher probable upside, research analysts plainly believe Hess Midstream is more favorable than Ecopetrol.

Risk & Volatility

Hess Midstream has a beta of 1.83, meaning that its share price is 83% more volatile than the S&P 500. Comparatively, Ecopetrol has a beta of 1.64, meaning that its share price is 64% more volatile than the S&P 500.

Earnings and Valuation

This table compares Hess Midstream and Ecopetrol’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Hess Midstream $1.20 billion 0.88 $46.40 million $1.76 17.86
Ecopetrol $27.52 billion 1.29 $5.01 billion $1.47 11.77

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

Profitability

This table compares Hess Midstream and Ecopetrol’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hess Midstream 3.85% N/A N/A
Ecopetrol 18.25% 21.49% 8.45%

Dividends

Hess Midstream pays an annual dividend of $2.07 per share and has a dividend yield of 6.6%. Ecopetrol pays an annual dividend of $1.38 per share and has a dividend yield of 8.0%. Hess Midstream pays out 117.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ecopetrol pays out 93.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hess Midstream has increased its dividend for 5 consecutive years. Ecopetrol is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

1.3% of Ecopetrol shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Ecopetrol beats Hess Midstream on 9 of the 16 factors compared between the two stocks.

About Hess Midstream (Get Rating)

Hess Midstream LP owns, develops, operates, and acquires midstream assets. The company operates through three segments: Gathering; Processing and Storage; and Terminaling and Export. The Gathering segment owns natural gas gathering and compression; crude oil gathering systems; and produced water gathering and disposal facilities. Its gathering systems consists of approximately 1,350 miles of high and low pressure natural gas and natural gas liquids gathering pipelines with capacity of approximately 450 million cubic feet per day; and crude oil gathering system comprises approximately 550 miles of crude oil gathering pipelines. The Processing and Storage segment comprises Tioga Gas Plant, a natural gas processing and fractionation plant located in Tioga, North Dakota; a 50% interest in the Little Missouri 4 gas processing plant located in south of the Missouri River in McKenzie County, North Dakota; and Mentor Storage Terminal, a propane storage cavern and rail, and truck loading and unloading facility located in Mentor, Minnesota. The Terminaling and Export segment owns Ramberg terminal facility; Tioga rail terminal; and crude oil rail cars, as well as Johnson's Corner Header System, a crude oil pipeline header system. Hess Midstream LP was founded in 2014 and is based in Houston, Texas.

About Ecopetrol (Get Rating)

Ecopetrol S.A. operates as an integrated oil and gas company. The company operates through three segments: Exploration and Production; Transport and Logistics; and Refining, Petrochemical and Biofuels. It engages in the exploration, production, and sale of oil and gas; offshore exploration; energy supply services; specialized management services; and distribution of natural gas and LPG activities. It also transports and distributes hydrocarbons and derivative products. As of December 31, 2020, the company had approximately 9,127 kilometers of crude oil and multi-purpose pipelines. In addition, the company manufactures and commercializes polypropylene resins, compounds, and masterbatches; and offers refined and petrochemical products, and biofuels, as well as industrial service sales to customers. It has operations in Colombia, the United States, Asia, Central America and the Caribbean, Europe, South America, and internationally. Ecopetrol S.A. has a strategic alliance with Occidental Petroleum Corporation. The company was formerly known as Empresa Colombiana de Petróleos and changed its name to Ecopetrol S.A. in June 2003. Ecopetrol S.A. was incorporated in 1948 and is based in Bogotá, Colombia.

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