Financial Analysis: Transportadora de Gas del Sur (TGS) & Antero Midstream Partners (AM)


Transportadora de Gas del Sur (NYSE: TGS) and Antero Midstream Partners (NYSE:AM) are both mid-cap oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitability.

Institutional & Insider Ownership

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9.6% of Transportadora de Gas del Sur shares are owned by institutional investors. Comparatively, 48.9% of Antero Midstream Partners shares are owned by institutional investors. 7.9% of Antero Midstream Partners shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.


Dividends

Antero Midstream Partners pays an annual dividend of $1.56 per share and has a dividend yield of 5.5%. Transportadora de Gas del Sur does not pay a dividend. Antero Midstream Partners pays out 111.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Antero Midstream Partners has increased its dividend for 2 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Transportadora de Gas del Sur and Antero Midstream Partners, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Transportadora de Gas del Sur 1 1 0 0 1.50
Antero Midstream Partners 0 1 11 0 2.92

Transportadora de Gas del Sur presently has a consensus target price of $25.00, indicating a potential upside of 40.69%. Antero Midstream Partners has a consensus target price of $35.92, indicating a potential upside of 27.54%. Given Transportadora de Gas del Sur’s higher probable upside, equities analysts clearly believe Transportadora de Gas del Sur is more favorable than Antero Midstream Partners.

Earnings and Valuation

This table compares Transportadora de Gas del Sur and Antero Midstream Partners’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Transportadora de Gas del Sur $742.27 million 3.80 $168.71 million $1.07 16.61
Antero Midstream Partners $772.50 million 6.82 $307.31 million $1.40 20.11

Antero Midstream Partners has higher revenue and earnings than Transportadora de Gas del Sur. Transportadora de Gas del Sur is trading at a lower price-to-earnings ratio than Antero Midstream Partners, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Transportadora de Gas del Sur has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, Antero Midstream Partners has a beta of 1.79, meaning that its stock price is 79% more volatile than the S&P 500.


Profitability

This table compares Transportadora de Gas del Sur and Antero Midstream Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Transportadora de Gas del Sur 25.94% 72.92% 28.67%
Antero Midstream Partners 32.52% 19.19% 9.90%

Summary

Antero Midstream Partners beats Transportadora de Gas del Sur on 13 of the 17 factors compared between the two stocks.


About Transportadora de Gas del Sur

Transportadora de Gas del Sur S.A. provides natural gas transportation and distribution services in Argentina. The company operates through four segments: Natural Gas Transportation, Production and Commercialization of Liquids, Other Services, and Telecommunications. The Natural Gas Transportation segment transports natural gas through 5,706 miles of pipeline system to distribution companies, producers, and traders. As of December 31, 2016, it served 6.0 million residential, commercial, industrial, and electric power generation end-users. It also provides operation and maintenance services for the natural gas transportation facilities. The Production and Commercialization of Liquids segment produces and commercializes natural gas liquids, such as ethane, LPG, natural gasoline, propane, and butane in Argentina and internationally. The Other Services segment offers midstream services, including natural gas treatment, separation, and removal of impurities from the natural gas stream, as well as natural gas compression. It also provides services related to pipeline and compression plant construction, operation, and maintenance; and compressor plants services, as well as generates steam for electricity production. The Telecommunications segment provides telecommunication services for telecommunication operators and corporate customers. Its telecommunication network includes a microwave digital network with synchronous digital hierarchy technology and a dark fiber optic network. The company was founded in 1992 and is headquartered in Buenos Aires, Argentina. Transportadora de Gas del Sur S.A. is a subsidiary of Compa帽铆a de Inversiones de Energ铆a S.A.


About Antero Midstream Partners

Antero Midstream Partners LP owns, operates, and develops midstream energy assets. The company operates in two segments, Gathering and Processing, and Water Handling and Treatment. Its assets include 8-, 12-, 16-, 20-, 24-, and 30-inch high and low pressure gathering pipelines, compressor stations, and processing and fractionation plants that collect and process natural gas, natural gas liquids, and crude oil from wells in the Marcellus Shale in West Virginia and the Utica Shale in Ohio; and water handling and treatment assets, which comprise two independent fresh water delivery systems that deliver fresh water from the Ohio River and several regional waterways, as well as wastewater handling services for well completion operations. As of December 31, 2017, the company's Marcellus and Utica Shale water handling and treatment systems included 190 miles and 83 miles of pipelines, respectively; and gathering systems comprised 242 miles and 123 miles of pipelines, respectively. Antero Midstream Partners GP LLC serves as the general partner of the company. The company was founded in 2013 and is headquartered in Denver, Colorado. Antero Midstream Partners LP is a subsidiary of Antero Resources Corporation.