Boardwalk Pipeline Partners (BWP) and Ultrapar Participacoes (UGP) Critical Review

Boardwalk Pipeline Partners (NYSE: BWP) and Ultrapar Participacoes (NYSE:UGP) are both oils/energy companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, earnings, dividends, profitability, valuation and risk.

Earnings and Valuation

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This table compares Boardwalk Pipeline Partners and Ultrapar Participacoes’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Boardwalk Pipeline Partners $1.32 billion 2.02 $297.00 million $1.16 9.20
Ultrapar Participacoes $25.07 billion 0.47 $493.07 million $0.90 23.60

Ultrapar Participacoes has higher revenue and earnings than Boardwalk Pipeline Partners. Boardwalk Pipeline Partners is trading at a lower price-to-earnings ratio than Ultrapar Participacoes, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Boardwalk Pipeline Partners and Ultrapar Participacoes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Boardwalk Pipeline Partners 22.46% 7.38% 3.92%
Ultrapar Participacoes 1.97% 17.10% 6.16%

Risk and Volatility

Boardwalk Pipeline Partners has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500. Comparatively, Ultrapar Participacoes has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500.

Dividends

Boardwalk Pipeline Partners pays an annual dividend of $0.40 per share and has a dividend yield of 3.7%. Ultrapar Participacoes pays an annual dividend of $0.54 per share and has a dividend yield of 2.5%. Boardwalk Pipeline Partners pays out 34.5% of its earnings in the form of a dividend. Ultrapar Participacoes pays out 60.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Boardwalk Pipeline Partners has increased its dividend for 2 consecutive years. Boardwalk Pipeline Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Boardwalk Pipeline Partners and Ultrapar Participacoes, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Boardwalk Pipeline Partners 1 3 3 0 2.29
Ultrapar Participacoes 1 1 0 0 1.50

Boardwalk Pipeline Partners currently has a consensus target price of $18.43, indicating a potential upside of 72.71%. Given Boardwalk Pipeline Partners’ stronger consensus rating and higher possible upside, equities analysts clearly believe Boardwalk Pipeline Partners is more favorable than Ultrapar Participacoes.

Insider and Institutional Ownership

93.7% of Boardwalk Pipeline Partners shares are held by institutional investors. Comparatively, 4.5% of Ultrapar Participacoes shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Boardwalk Pipeline Partners beats Ultrapar Participacoes on 10 of the 16 factors compared between the two stocks.

About Boardwalk Pipeline Partners

Boardwalk Pipeline Partners, LP is a limited partnership company. The Company’s business includes integrated natural gas and natural gas liquids, and other hydrocarbons (referred to together as NGLs) pipeline and storage systems. The Company is engaged in the operation of interstate natural gas and NGLs pipeline systems, and integrated storage facilities, including interstate natural gas pipeline systems located in the Gulf Coast region, Oklahoma, Arkansas and the Midwestern states of Tennessee, Kentucky, Illinois, Indiana and Ohio, and its NGLs pipelines and storage facilities in Louisiana and Texas. The Company conducts business through its subsidiary, Boardwalk Pipelines, LP (Boardwalk Pipelines), and its subsidiaries, Gulf South Pipeline Company, LP, Texas Gas Transmission, LLC, Gulf Crossing Pipeline Company LLC, Boardwalk Louisiana Midstream, LLC, Boardwalk Petrochemical Pipeline, LLC and Boardwalk Field Services, LLC.

About Ultrapar Participacoes

Ultrapar Participações S.A., through its subsidiaries, engages in the liquefied petroleum gas (LPG) distribution, fuel distribution, and related businesses. It operates through five segments: Gas Distribution, Fuel Distribution, Chemicals, Storage, and Drugstores. The Gas Distribution segment distributes LPG to residential, commercial, and industrial consumers, as well as independent dealers, principally in the South, Southeast, and Northeast regions of Brazil. The Fuel Distribution segment is involved in the distribution and marketing of gasoline, ethanol, diesel, fuel oil, kerosene, natural gas for vehicles, and lubricants and related activities through a network of 7,563 Ipiranga service stations. The Chemicals segment produces ethylene oxide and its derivatives, as well as fatty alcohols, which are raw materials used in the home and personal care, agrochemical, paints, varnishes, and other industries. The Storage segment operates liquid bulk terminals, primarily in the Southeast and Northeast regions of Brazil. The Drugstores segment trades in pharmaceutical, hygiene, and beauty products through its own drugstore chain in the states of Amapá, Ceará, Maranhão, Pará, Paraíba, Pernambuco, Piauí, Rio Grande do Norte, São Paulo, and Tocantins. Further, it provides specialty chemicals; and stores liquid bulk in six ports. The company also has operations in the United States, Mexico, Uruguay, and Venezuela. Ultrapar Participações S.A. was founded in 1937 and is headquartered in Sao Paulo, Brazil.

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