Summit Midstream (NYSE:SMC) and Targa Resources (NYSE:TRGP) Critical Contrast

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

Profitability

This table compares Summit Midstream and Targa Resources’ 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%
Targa Resources	7.65%	27.59%	5.86%

Valuation & Earnings

This table compares Summit Midstream and Targa Resources”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Summit Midstream	$458.90 million	0.94	-$38.95 million	($12.81)	-3.18
Targa Resources	$16.06 billion	2.75	$828.20 million	$5.53	36.63

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

Institutional and Insider Ownership

43.0% of Summit Midstream shares are owned by institutional investors. Comparatively, 92.1% of Targa Resources shares are owned by institutional investors. 5.3% of Summit Midstream shares are owned by company insiders. Comparatively, 1.4% of Targa Resources shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Summit Midstream and Targa Resources, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Summit Midstream	0	0	0	0	0.00
Targa Resources	0	1	13	1	3.00

Targa Resources has a consensus target price of $189.21, suggesting a potential downside of 6.58%. Given Targa Resources’ stronger consensus rating and higher probable upside, analysts clearly believe Targa Resources is more favorable than Summit Midstream.

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, Targa Resources has a beta of 2.3, indicating that its stock price is 130% more volatile than the S&P 500.

Summary

Targa Resources 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 Targa Resources

Targa Resources Corp., together with its subsidiary, Targa Resources Partners LP, owns, operates, acquires, and develops a portfolio of complementary domestic midstream infrastructure assets in North America. It operates in two segments, Gathering and Processing, and Logistics and Transportation. The company is involved in gathering, compressing, treating, processing, transporting, and selling natural gas; storing, fractionating, treating, transporting, and selling natural gas liquids (NGL) and NGL products, including services to liquefied petroleum gas exporters; and gathering, storing, terminaling, purchasing, and selling crude oil. It is also involved in the purchase and resale of NGL products; and sale of propane, as well as provision of related logistics services to multi-state retailers, independent retailers, and other end-users. In addition, the company offers NGL balancing services; and transportation services to refineries and petrochemical companies in the Gulf Coast area, as well as purchases, markets, and resells natural gas. As of December 31, 2023, it leased and managed approximately 605 railcars; 137 tractors; and 6 vacuum trucks and 2 pressurized NGL barges. Targa Resources Corp. was incorporated in 2005 and is headquartered in Houston, Texas.