Ultrapar Participacoes (NYSE:UGP) vs. Galp Energia SGPS (OTCMKTS:GLPEY) Critical Contrast

Ultrapar Participacoes (NYSE:UGP) and Galp Energia SGPS (OTCMKTS:GLPEY) are both energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, dividends, analyst recommendations, institutional ownership, risk and valuation.

Dividends

Ultrapar Participacoes pays an annual dividend of $0.31 per share and has a dividend yield of 4.0%. Galp Energia SGPS pays an annual dividend of $0.18 per share and has a dividend yield of 1.4%. Ultrapar Participacoes pays out 50.8% of its earnings in the form of a dividend. Galp Energia SGPS pays out 20.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares Ultrapar Participacoes and Galp Energia SGPS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ultrapar Participacoes	2.28%	18.84%	7.17%
Galp Energia SGPS	5.43%	30.13%	10.03%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Ultrapar Participacoes and Galp Energia SGPS, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ultrapar Participacoes	0	4	3	1	2.62
Galp Energia SGPS	0	5	3	1	2.56

Ultrapar Participacoes currently has a consensus price target of $6.54, suggesting a potential downside of 16.10%. Given Ultrapar Participacoes’ stronger consensus rating and higher probable upside, equities analysts clearly believe Ultrapar Participacoes is more favorable than Galp Energia SGPS.

Earnings & Valuation

This table compares Ultrapar Participacoes and Galp Energia SGPS”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ultrapar Participacoes	$25.51 billion	0.34	$439.48 million	$0.61	12.78
Galp Energia SGPS	$22.89 billion	0.76	$1.27 billion	$0.86	14.86

Galp Energia SGPS has lower revenue, but higher earnings than Ultrapar Participacoes. Ultrapar Participacoes is trading at a lower price-to-earnings ratio than Galp Energia SGPS, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

3.6% of Ultrapar Participacoes shares are owned by institutional investors. 1.8% of Ultrapar Participacoes shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

About Ultrapar Participacoes

Ultrapar Participações S.A., through its subsidiaries, operates in the energy and infrastructure business in Brazil. The company distributes liquefied petroleum gas to residential, commercial, and industrial consumers, in addition to renewable electricity and compressed natural gas. It also operates in the distribution and marketing of gasoline, ethanol, diesel, fuel oil, kerosene, natural gas for vehicles, and lubricants; and holds AmPm convenience stores and provides JetOil lubricant services. In addition, the company operates liquid bulk storage terminals. Further, it offers digital payments services, combining the abastece aí app and the loyalty program Km de Vantagens. It also exports its products and services to customers in Europe, Singapore, the United States, Canada, other Latin American countries, and internationally. The company was founded in 1937 and is headquartered in São Paulo, Brazil.

About Galp Energia SGPS

Galp Energia, SGPS, S.A. operates as an integrated energy operator in Portugal and internationally. The company operates through four segments: Upstream, Industrial & Midstream, Commercial, and Renewables and New Business. The Upstream segment engages in the exploration, development, and production of hydrocarbons primarily in Brazil, Mozambique, Namibia, and Angola. The Industrial & Midstream segment owns refineries in Portugal, as well as is involved in activities related to energy management of oil products, gas, and electricity. This segment provides storage and transportation infrastructure for oil and gas products, as well as engages in the sale of electricity to the grid in Portugal and Spain. The Commercial segment is involved in the areas of retail to final business-to-business and business to consumer customers of oil, gas, and electricity. The Renewables and New Business segment is involved in the development of solar and wind power generation projects in Portugal and Spain. In addition, it produces lithium-ion batteries, hydrogen, and biofuels; and operates service stations. Further, the company engages in the reinsurance business. The company was formerly known as Galp Petróleos e Gás de Portugal, SGPS, S.A. and changed its name to Galp Energia, SGPS, S.A. in September 2000. Galp Energia, SGPS, S.A. was incorporated in 1999 and is headquartered in Lisbon, Portugal.