SM Energy (NYSE:SM) vs. Hess Midstream (NYSE:HESM) Head to Head Survey

SM Energy (NYSE:SM) and Hess Midstream (NYSE:HESM) are both mid-cap oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.

Institutional and Insider Ownership

94.6% of SM Energy shares are held by institutional investors. Comparatively, 99.0% of Hess Midstream shares are held by institutional investors. 1.5% of SM Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

SM Energy pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. Hess Midstream pays an annual dividend of $2.73 per share and has a dividend yield of 7.2%. SM Energy pays out 11.2% of its earnings in the form of a dividend. Hess Midstream pays out 115.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares SM Energy and Hess Midstream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SM Energy	33.89%	19.62%	10.87%
Hess Midstream	13.06%	47.87%	4.80%

Volatility & Risk

SM Energy has a beta of 4.14, suggesting that its share price is 314% more volatile than the S&P 500. Comparatively, Hess Midstream has a beta of 1.52, suggesting that its share price is 52% more volatile than the S&P 500.

Earnings & Valuation

This table compares SM Energy and Hess Midstream”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SM Energy	$2.44 billion	2.03	$817.88 million	$7.16	6.06
Hess Midstream	$1.45 billion	5.70	$118.60 million	$2.36	16.09

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

Analyst Recommendations

This is a breakdown of recent recommendations for SM Energy and Hess Midstream, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SM Energy	0	6	6	1	2.62
Hess Midstream	0	2	1	0	2.33

SM Energy currently has a consensus target price of $51.20, indicating a potential upside of 17.92%. Hess Midstream has a consensus target price of $38.67, indicating a potential upside of 1.83%. Given SM Energy’s stronger consensus rating and higher probable upside, equities research analysts clearly believe SM Energy is more favorable than Hess Midstream.

Summary

SM Energy beats Hess Midstream on 12 of the 17 factors compared between the two stocks.

About SM Energy

SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in the state of Texas. It has working interests in oil and gas producing wells in the Midland Basin and South Texas. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado.

About Hess Midstream

Hess Midstream LP owns, develops, operates, and acquires midstream assets and provide fee-based services to Hess and third-party customers in the United States. It operates through three segments: Gathering; Processing and Storage; and Terminaling and Export. The Gathering segment owns natural gas gathering and compression systems; crude oil gathering systems; and produced water gathering and disposal facilities. Its gathering systems consists of approximately 1,410 miles of high and low pressure natural gas and natural gas liquids gathering pipelines with capacity of approximately 660 million cubic feet per day; crude oil gathering system comprises approximately 570 miles of crude oil gathering pipelines; and produced water gathering system that includes approximately 300 miles of pipelines in gathering systems. The Processing and Storage segment comprises Tioga Gas Plant, a natural gas processing and fractionation plant located in Tioga, North Dakota; a 50% interest in the Little Missouri 4 gas processing plant located in south of the Missouri River in McKenzie County, North Dakota; and Mentor Storage Terminal, a propane storage cavern and rail, and truck loading and unloading facility located in Mentor, Minnesota. The Terminaling and Export segment owns Ramberg terminal facility; Tioga rail terminal; crude oil rail cars; and other Dakota access pipeline connections, as well as Johnson's Corner Header System, a crude oil pipeline header system. Hess Midstream LP was founded in 2014 and is based in Houston, Texas.