Financial Review: Williams Companies (NYSE:WMB) and Mplx (NYSE:MPLX)

Williams Companies (NYSE:WMB) and Mplx (NYSE:MPLX) are both large-cap oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, dividends, risk, institutional ownership, valuation, profitability and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings and price targets for Williams Companies and Mplx, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Williams Companies	0	7	8	0	2.53
Mplx	1	1	6	0	2.63

Williams Companies presently has a consensus price target of $61.25, suggesting a potential upside of 4.73%. Mplx has a consensus price target of $55.50, suggesting a potential upside of 7.90%. Given Mplx’s stronger consensus rating and higher probable upside, analysts plainly believe Mplx is more favorable than Williams Companies.

Dividends

Williams Companies pays an annual dividend of $2.00 per share and has a dividend yield of 3.4%. Mplx pays an annual dividend of $3.83 per share and has a dividend yield of 7.4%. Williams Companies pays out 107.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mplx pays out 88.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Williams Companies has raised its dividend for 9 consecutive years and Mplx has raised its dividend for 9 consecutive years. Mplx is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Williams Companies has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Mplx has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500.

Institutional and Insider Ownership

86.4% of Williams Companies shares are owned by institutional investors. Comparatively, 24.3% of Mplx shares are owned by institutional investors. 0.4% of Williams Companies shares are owned by company insiders. 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.

Valuation and Earnings

This table compares Williams Companies and Mplx”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Williams Companies	$10.50 billion	6.79	$2.23 billion	$1.87	31.27
Mplx	$11.93 billion	4.40	$4.32 billion	$4.33	11.88

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Williams Companies	21.18%	15.95%	4.37%
Mplx	36.34%	32.08%	11.57%

Summary

Mplx beats Williams Companies on 11 of the 16 factors compared between the two stocks.

About Williams Companies

The Williams Companies, Inc., together with its subsidiaries, operates as an energy infrastructure company primarily in the United States. It operates through Transmission & Gulf of Mexico, Northeast G&P, West, and Gas & NGL Marketing Services segments. The Transmission & Gulf of Mexico segment comprises natural gas pipelines; Transco, Northwest pipeline, MountainWest, and related natural gas storage facilities; and natural gas gathering and processing, and crude oil production handling and transportation assets in the Gulf Coast region. The Northeast G&P segment engages in the midstream gathering, processing, and fractionation activities in the Marcellus Shale region primarily in Pennsylvania and New York, and the Utica Shale region of eastern Ohio. The West segment consists of gas gathering, processing, and treating operations in the Rocky Mountain region of Colorado and Wyoming, the Barnett Shale region of north-central Texas, the Eagle Ford Shale region of South Texas, the Haynesville Shale region of northwest Louisiana, the Mid-Continent region that includes the Anadarko and Permian basins, and the DJ Basin of Colorado; and operates natural gas liquid (NGL) fractionation and storage facilities in central Kansas near Conway. The Gas & NGL Marketing Services segment provides wholesale marketing, trading, storage, and transportation of natural gas for natural gas utilities, municipalities, power generators, and producers; asset management services; and transports and markets NGLs. The company owns and operates 33,000 miles of pipelines. The Williams Companies, Inc. was founded in 1908 and is headquartered in Tulsa, Oklahoma.

About Mplx

MPLX LP engages in the operation of midstream energy infrastructure and logistics assets, and distribution fuels services. It operates through the Crude Oil and Products Logistics and Natural Gas and NGL Services segments. The Crude Oil and Products Logistics segment transports, stores, distributes, and markets crude oil, asphalt, refined petroleum products, and water. The Natural Gas and NGL Services segment gathers, processes, and transports natural gas, and gathers, transports, fractionates, stores, and markets natural gas liquids (NGLs). The company was founded on March 27, 2012 and is headquartered in Findlay, OH.