Critical Analysis: Natural Gas Services Group (NGS) & Tenaris (NYSE:TS)

Natural Gas Services Group (NYSE: NGS) and Tenaris (NYSE:TS) are both oils/energy companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.

Institutional & Insider Ownership

82.9% of Natural Gas Services Group shares are owned by institutional investors. Comparatively, 17.6% of Tenaris shares are owned by institutional investors. 6.9% of Natural Gas Services Group shares are owned by company insiders. Comparatively, 0.2% of Tenaris 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 for Natural Gas Services Group and Tenaris, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Natural Gas Services Group 0 0 2 0 3.00
Tenaris 1 3 7 0 2.55

Natural Gas Services Group currently has a consensus target price of $35.50, suggesting a potential upside of 55.70%. Tenaris has a consensus target price of $35.17, suggesting a potential upside of 29.24%. Given Natural Gas Services Group’s stronger consensus rating and higher probable upside, research analysts clearly believe Natural Gas Services Group is more favorable than Tenaris.

Dividends

Tenaris pays an annual dividend of $1.12 per share and has a dividend yield of 4.1%. Natural Gas Services Group does not pay a dividend. Tenaris pays out 196.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Natural Gas Services Group has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500. Comparatively, Tenaris has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.

Earnings and Valuation

This table compares Natural Gas Services Group and Tenaris’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Natural Gas Services Group $68.00 million 4.34 $25.46 million $0.26 87.70
Tenaris $4.43 billion 3.63 $777.43 million $0.57 47.74

Tenaris has higher revenue and earnings than Natural Gas Services Group. Tenaris is trading at a lower price-to-earnings ratio than Natural Gas Services Group, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Natural Gas Services Group and Tenaris’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Natural Gas Services Group 4.85% 1.41% 1.13%
Tenaris 7.35% 2.00% 1.63%

About Natural Gas Services Group

Natural Gas Services Group, Inc. is a provider of small to medium horsepower compression equipment to the natural gas industry. The Company focuses primarily on the non-conventional natural gas and oil production business in the United States, such as coal bed methane, gas shale, tight gas and oil shales. The Company manufactures, fabricates and rents natural gases compressors that enhance the production of natural gas wells and provides maintenance services for its natural gas compressors. In addition, it sells custom fabricated natural gas compressors to meet customer specifications dictated by well pressures, production characteristics and particular applications. It also manufactures and sells flare systems for oil and gas plant and production facilities. The Company’s operating units include Gas Compressor Rental, Engineered Equipment Sales, Service and Maintenance, and Corporate.

About Tenaris

Tenaris S.A. is a holding company, which is a steel producer with production facilities in Mexico, Argentina, Colombia, United States and Guatemala. The Company supplies round steel bars and flat steel products for its pipes business. It operates through Tubes business segment. The Tubes segment includes the production and sale of both seamless and welded steel tubular products, and related services primarily for the oil and gas industry, principally oil country tubular goods (OCTG) used in drilling operations, and for other industrial applications with production processes that include in the transformation of steel into tubular products. It operates in geographical areas, such as North America, South America, Europe, Middle East and Africa, and Asia Pacific. Its products and services include OCTG, Premium Connections, Rig Direct, Offshore Line Pipe, Onshore Line Pipe, Hydrocarbon Processing, Power Generation, Sucker Rods, Coiled Tubing, Industrial and Mechanical, and Automotive.

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