Hess Midstream (NYSE:HESM) vs. Matador Resources (NYSE:MTDR) Critical Review

Hess Midstream (NYSE:HESM) and Matador Resources (NYSE:MTDR) are both mid-cap oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Profitability

This table compares Hess Midstream and Matador Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hess Midstream	14.92%	54.59%	5.55%
Matador Resources	27.45%	20.01%	10.67%

Institutional and Insider Ownership

99.0% of Hess Midstream shares are owned by institutional investors. Comparatively, 92.0% of Matador Resources shares are owned by institutional investors. 6.1% of Matador Resources shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hess Midstream	$1.50 billion	5.89	$223.10 million	$2.49	16.23
Matador Resources	$3.33 billion	2.12	$846.07 million	$7.55	7.51

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

Dividends

Hess Midstream pays an annual dividend of $2.80 per share and has a dividend yield of 6.9%. Matador Resources pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. Hess Midstream pays out 112.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Matador Resources pays out 13.2% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings for Hess Midstream and Matador Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hess Midstream	0	2	2	0	2.50
Matador Resources	0	1	13	0	2.93

Hess Midstream presently has a consensus target price of $41.50, suggesting a potential upside of 2.67%. Matador Resources has a consensus target price of $75.14, suggesting a potential upside of 32.57%. Given Matador Resources’ stronger consensus rating and higher possible upside, analysts plainly believe Matador Resources is more favorable than Hess Midstream.

Risk and Volatility

Hess Midstream has a beta of 1.53, meaning that its share price is 53% more volatile than the S&P 500. Comparatively, Matador Resources has a beta of 3.22, meaning that its share price is 222% more volatile than the S&P 500.

Summary

Matador Resources beats Hess Midstream on 11 of the 16 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 Matador Resources

Matador Resources Company, an independent energy company, engages in the exploration, development, production, and acquisition of oil and natural gas resources in the United States. It operates through two segments, Exploration and Production; and Midstream. The company primarily holds interests in the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. It also operates the Eagle Ford shale play in South Texas; and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. In addition, the company conducts midstream operations in support of its exploration, development, and production operations. Further, it provides natural gas processing and oil transportation services; and oil, natural gas, and produced water gathering services, as well as produced water disposal services to third parties. The company sells natural gas to unaffiliated independent marketing companies and unaffiliated midstream companies. The company was formerly known as Matador Holdco, Inc. and changed its name to Matador Resources Company in August 2011. Matador Resources Company was founded in 2003 and is headquartered in Dallas, Texas.