Contrasting Plains All American Pipeline (NASDAQ:PAA) and Plains GP (NYSE:PAGP)

Plains All American Pipeline (NASDAQ:PAA) and Plains GP (NYSE:PAGP) are both transportation, communications, electric, gas, and sanitary services companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, dividends, institutional ownership, profitability and analyst recommendations.

Dividends

Plains All American Pipeline pays an annual dividend of $1.52 per share and has a dividend yield of 8.6%. Plains GP pays an annual dividend of $1.52 per share and has a dividend yield of 8.1%. Plains All American Pipeline pays out 125.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Plains GP pays out 163.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Plains All American Pipeline is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

41.8% of Plains All American Pipeline shares are owned by institutional investors. Comparatively, 88.3% of Plains GP shares are owned by institutional investors. 0.9% of Plains All American Pipeline shares are owned by company insiders. Comparatively, 6.8% of Plains GP shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Plains All American Pipeline and Plains GP’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Plains All American Pipeline	2.42%	11.04%	4.41%
Plains GP	0.21%	0.70%	0.36%

Analyst Recommendations

This is a summary of recent ratings and target prices for Plains All American Pipeline and Plains GP, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Plains All American Pipeline	0	0	1	0	3.00
Plains GP	1	5	1	2	2.44

Plains GP has a consensus price target of $20.38, indicating a potential upside of 8.15%. Given Plains GP’s higher probable upside, analysts plainly believe Plains GP is more favorable than Plains All American Pipeline.

Valuation & Earnings

This table compares Plains All American Pipeline and Plains GP”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Plains All American Pipeline	$50.07 billion	0.25	$772.00 million	$1.21	14.68
Plains GP	$46.92 billion	0.08	$103.00 million	$0.93	20.26

Plains All American Pipeline has higher revenue and earnings than Plains GP. Plains All American Pipeline is trading at a lower price-to-earnings ratio than Plains GP, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Plains All American Pipeline has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, Plains GP has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Summary

Plains All American Pipeline beats Plains GP on 11 of the 16 factors compared between the two stocks.

About Plains All American Pipeline

Plains All American Pipeline, L.P., through its subsidiaries, engages in the pipeline transportation, terminalling, storage, and gathering of crude oil and natural gas liquids (NGL) in the United States and Canada. The company operates in two segments, Crude Oil and NGL. The Crude Oil segment offers gathering and transporting crude oil through pipelines, gathering systems, trucks, and at times on barges or railcars. This segment provides terminalling, storage, and other facilities-related services, as well as merchant activities. As of December 31, 2021, this segment owned and leased 18,300 miles of active crude oil transportation pipelines and gathering systems, as well as an additional 110 miles of pipelines that supports crude oil storage and terminalling facilities; 74 million barrels of commercial crude oil storage capacity; 38 million barrels of active, above-ground tank capacity; four marine facilities; a condensate processing facility; seven crude oil rail terminals and 2,100 crude oil railcars; and 640 trucks and 1,275 trailers. The Natural Gas Liquids segment engages in the natural gas processing, NGL fractionation, storage, transportation, and terminalling activities. As of December 31, 2021, this segment owned and operated four natural gas processing plants; nine fractionation plants; 28 million barrels of NGL storage capacity; approximately 1,620 miles of active NGL transportation pipelines, as well as an additional 55 miles of pipeline that supports NGL storage facilities; 16 NGL rail terminals and approximately 3,900 NGL rail cars; and approximately 220 trailers. The company was founded in 1981 and is headquartered in Houston, Texas.

About Plains GP

Plains GP Holdings, L.P., through its subsidiary, Plains All American Pipeline, L.P., owns and operates midstream infrastructure systems in the United States and Canada. It operates in two segments, Crude Oil and Natural Gas Liquids (NGLs). The company engages in the gathering and transporting crude oil and NGLs using pipelines, gathering systems, and trucks. It engages in the loading and unloading services at terminals; NGL fractionation and isomerization services; and natural gas and condensate processing services. The company offers logistics services to producers, refiners, and other customers. PAA GP Holdings LLC operates as a general partner of the company. Plains GP Holdings, L.P. was incorporated in 2013 and is headquartered in Houston, Texas.