Williams Companies (NYSE: WMB) and Teekay Tankers (NYSE:TNK) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.
Williams Companies pays an annual dividend of $1.36 per share and has a dividend yield of 4.8%. Teekay Tankers pays an annual dividend of $0.12 per share and has a dividend yield of 9.9%. Williams Companies pays out 469.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Teekay Tankers pays out -36.4% of its earnings in the form of a dividend. Teekay Tankers is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares Williams Companies and Teekay Tankers’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Williams Companies||$8.03 billion||2.90||$2.17 billion||$0.29||97.03|
|Teekay Tankers||$431.18 million||0.50||-$58.02 million||($0.33)||-3.67|
Williams Companies has higher revenue and earnings than Teekay Tankers. Teekay Tankers is trading at a lower price-to-earnings ratio than Williams Companies, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
86.5% of Williams Companies shares are owned by institutional investors. Comparatively, 47.6% of Teekay Tankers shares are owned by institutional investors. 0.5% of Williams Companies shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This is a summary of current ratings and price targets for Williams Companies and Teekay Tankers, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Williams Companies presently has a consensus price target of $35.22, indicating a potential upside of 25.17%. Teekay Tankers has a consensus price target of $1.87, indicating a potential upside of 54.27%. Given Teekay Tankers’ higher probable upside, analysts clearly believe Teekay Tankers is more favorable than Williams Companies.
Risk & Volatility
Williams Companies has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, Teekay Tankers has a beta of 2.17, meaning that its share price is 117% more volatile than the S&P 500.
This table compares Williams Companies and Teekay Tankers’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Williams Companies beats Teekay Tankers on 12 of the 16 factors compared between the two stocks.
Williams Companies Company Profile
The Williams Companies, Inc. is an energy infrastructure company. The Company is focused on connecting North America’s hydrocarbon resource plays to markets for natural gas, natural gas liquids (NGL), and olefins. As of December 31, 2016, its interstate gas pipelines, midstream and olefins production interests were held through its investment in Williams Partners L.P. (WPZ). The Company’s segments include Williams Partners, Williams NGL & Petchem Services and Other. The Williams Partners segment includes its consolidated master limited partnership, WPZ. The gas pipeline business includes interstate natural gas pipelines and pipeline joint project investments. The midstream business provides natural gas gathering, treating, processing and compression services. The Williams NGL & Petchem Services segment includes its Texas Belle pipeline and certain other domestic olefins pipeline assets. Other segment includes its corporate operations and Canadian construction services company.
Teekay Tankers Company Profile
Teekay Tankers Ltd. is an international provider of marine transportation to the oil industries. The Company’s business is to own crude oil and product tankers. The Company has two segments: conventional tanker and ship-to-ship transfer. Its conventional tanker segment consists of the operation of all of its tankers, including those employed on full service lightering contracts. Its ship-to-ship transfer segment consists of its lightering support services, including those provided to the Company’s conventional tanker segment as part of full service lightering operations and other related services. Its operations are managed by Teekay Tankers Management Services Ltd., which provides the Company with commercial, technical, administrative and strategic services. Its fleet consists of approximately 60 conventional vessels (including over 10 in-chartered vessels and an approximately 50%-owned very large crude carrier (VLCC)) and approximately six ship-to-ship (STS) support vessels.
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