Financial Analysis: Summit Midstream (NYSE:SMC) vs. USA Compression Partners (NYSE:USAC)

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

Institutional & Insider Ownership

47.8% of USA Compression Partners shares are owned by institutional investors. Comparatively, 43.0% of Summit Midstream shares are owned by institutional investors. 5.3% of Summit Midstream shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Risk and Volatility

USA Compression Partners has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500. Comparatively, Summit Midstream has a beta of 2.37, indicating that its share price is 137% more volatile than the S&P 500.

Profitability

This table compares USA Compression Partners and Summit Midstream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
USA Compression Partners	10.48%	-62.46%	3.35%
Summit Midstream	-23.01%	0.71%	0.22%

Analyst Ratings

This is a summary of recent recommendations for USA Compression Partners and Summit Midstream, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
USA Compression Partners	0	3	1	0	2.25
Summit Midstream	0	0	0	0	0.00

USA Compression Partners presently has a consensus target price of $27.50, suggesting a potential upside of 6.57%. Given USA Compression Partners’ stronger consensus rating and higher probable upside, equities research analysts plainly believe USA Compression Partners is more favorable than Summit Midstream.

Valuation and Earnings

This table compares USA Compression Partners and Summit Midstream”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
USA Compression Partners	$950.45 million	3.19	$99.57 million	$0.73	35.35
Summit Midstream	$449.92 million	0.98	-$38.95 million	($12.81)	-3.24

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

Summary

USA Compression Partners beats Summit Midstream on 11 of the 14 factors compared between the two stocks.

About USA Compression Partners

USA Compression Partners, LP provides compression services under term contracts with customers in the natural gas and crude oil industries in the United States. The company engineers, designs, operates, services, and repairs its compression units; and maintains related support inventory and equipment. It also provides compression services in various shale plays, including the Utica, Marcellus, Permian Basin, Delaware Basin, Eagle Ford, Mississippi Lime, Granite Wash, Woodford, Barnett, Haynesville, Niobrara, and Fayetteville shales. As of December 31, 2017, the company had approximately 1,799,781 horsepower in its fleet. It serves oil companies; and independent producers, processors, gatherers, and transporters of natural gas and crude oil. USA Compression GP, LLC operates as the general partner of USA Compression Partners, LP. The company was formerly known as Compression Holdings, LP, and changed its name to USA Compression Partners, LP in June 2011. USA Compression Partners, LP was founded in 1998 and is headquartered in Austin, 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.