Critical Review: EnLink Midstream (NYSE:ENLC) versus Summit Midstream (NYSE:SMC)

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

Analyst Recommendations

This is a summary of current ratings and price targets for Summit Midstream and EnLink Midstream, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Summit Midstream	0	0	0	0	0.00
EnLink Midstream	0	10	2	1	2.31

EnLink Midstream has a consensus target price of $15.40, indicating a potential upside of 2.93%. Given EnLink Midstream’s stronger consensus rating and higher probable upside, analysts plainly believe EnLink Midstream is more favorable than Summit Midstream.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Summit Midstream	-23.01%	0.71%	0.22%
EnLink Midstream	1.96%	9.51%	2.76%

Earnings & Valuation

This table compares Summit Midstream and EnLink Midstream”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Summit Midstream	$458.90 million	1.00	-$38.95 million	($12.81)	-3.36
EnLink Midstream	$6.90 billion	0.99	$206.20 million	$0.21	71.24

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

Insider and Institutional Ownership

43.0% of Summit Midstream shares are owned by institutional investors. Comparatively, 45.9% of EnLink Midstream shares are owned by institutional investors. 5.3% of Summit Midstream shares are owned by company insiders. Comparatively, 0.8% of EnLink Midstream shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Summit Midstream has a beta of 2.37, indicating that its stock price is 137% more volatile than the S&P 500. Comparatively, EnLink Midstream has a beta of 2.43, indicating that its stock price is 143% more volatile than the S&P 500.

Summary

EnLink Midstream beats Summit Midstream on 13 of the 15 factors compared between the two stocks.

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.

About EnLink Midstream

EnLink Midstream, LLC provides midstream energy services in the United States. The company operates through Permian, Louisiana, Oklahoma, North Texas, and Corporate segments. It is involved in gathering, compressing, treating, processing, transporting, storing, and selling natural gas; fractionating, transporting, storing, and selling natural gas liquids; and gathering, transporting, stabilizing, storing, trans-loading, and selling crude oil and condensate, as well as providing brine disposal services. In addition, the company's midstream energy asset network includes natural gas processing plants; fractionators; barge and rail terminals; product storage facilities; and brine disposal wells. EnLink Midstream, LLC was incorporated in 2013 and is based in Dallas, Texas.