Summit Midstream (NYSE:SMC) vs. Kinder Morgan (NYSE:KMI) Critical Analysis

Kinder Morgan (NYSE:KMI) and Summit Midstream (NYSE:SMC) are both oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitability.

Insider & Institutional Ownership

62.5% of Kinder Morgan shares are held by institutional investors. Comparatively, 43.0% of Summit Midstream shares are held by institutional investors. 12.6% of Kinder Morgan shares are held by insiders. Comparatively, 5.3% of Summit Midstream shares are held 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.

Valuation and Earnings

This table compares Kinder Morgan and Summit Midstream”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kinder Morgan	$15.33 billion	3.95	$2.39 billion	$1.14	23.90
Summit Midstream	$449.92 million	0.86	-$38.95 million	($12.81)	-2.84

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Kinder Morgan and Summit Midstream, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kinder Morgan	0	7	5	1	2.54
Summit Midstream	0	0	0	0	0.00

Kinder Morgan presently has a consensus price target of $26.25, suggesting a potential downside of 3.67%. Given Kinder Morgan’s stronger consensus rating and higher possible upside, analysts clearly believe Kinder Morgan is more favorable than Summit Midstream.

Profitability

This table compares Kinder Morgan and Summit Midstream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kinder Morgan	16.76%	7.87%	3.52%
Summit Midstream	-23.01%	0.71%	0.22%

Volatility & Risk

Kinder Morgan has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Summit Midstream has a beta of 2.39, suggesting that its stock price is 139% more volatile than the S&P 500.

Summary

Kinder Morgan beats Summit Midstream on 14 of the 15 factors compared between the two stocks.

About Kinder Morgan

Kinder Morgan, Inc. operates as an energy infrastructure company primarily in North America. The company operates through Natural Gas Pipelines, Products Pipelines, Terminals, and CO2 segments. The Natural Gas Pipelines segment owns and operates interstate and intrastate natural gas pipeline, and storage systems; natural gas gathering systems and natural gas processing and treating facilities; natural gas liquids fractionation facilities and transportation systems; and liquefied natural gas gasification, liquefaction, and storage facilities. The Products Pipelines segment owns and operates refined petroleum products, and crude oil and condensate pipelines; and associated product terminals and petroleum pipeline transmix facilities. The Terminals segment owns and/or operates liquids and bulk terminals that stores and handles various commodities, including gasoline, diesel fuel, renewable fuel and feedstocks, chemicals, ethanol, metals, and petroleum coke; and owns tankers. The CO2 segment produces, transports, and markets CO2 to recovery and production crude oil from mature oil fields; owns interests in/or operates oil fields and gasoline processing plants; and operates a crude oil pipeline system in West Texas, as well as owns and operates RNG and LNG facilities. It owns and operates approximately 82,000 miles of pipelines and 139 terminals. The company was formerly known as Kinder Morgan Holdco LLC and changed its name to Kinder Morgan, Inc. in February 2011. Kinder Morgan, Inc. was incorporated in 2006 and is headquartered in Houston, Texas.

About Summit Midstream

Summit Midstream Corporation focuses on owning, developing, and operating midstream energy infrastructure assets primarily shale formations in the continental United States. It operates natural gas, crude oil, and produced water gathering systems in four unconventional resource basins, including the Williston Basin in North Dakota, which includes the Bakken and Three Forks shale formations; the Denver-Julesburg Basin that consists of the Niobrara and Codell shale formations in Colorado and Wyoming; the Fort Worth Basin in Texas, which comprises the Barnett Shale formation; and the Piceance Basin in Colorado, which includes the Mesaverde formation, as well as the emerging Mancos and Niobrara Shale formations. It serves natural gas and crude oil producers. Summit Midstream Corporation was founded in 2012 and is based in Houston, Texas.