Reviewing Hess Midstream (NYSE:HESM) & SM Energy (NYSE:SM)

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

Risk & Volatility

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

Earnings & Valuation

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

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

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 Ratings

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

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

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

Profitability

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

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

Institutional and Insider Ownership

99.0% of Hess Midstream shares are owned by institutional investors. Comparatively, 94.6% of SM Energy shares are owned by institutional investors. 1.5% of SM Energy 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.

Dividends

Hess Midstream pays an annual dividend of $2.73 per share and has a dividend yield of 7.2%. SM Energy pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. 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. SM Energy pays out 11.2% of its earnings in the form of a dividend.

Summary

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

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.

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.