Earthstone Energy (NYSE: ESTE) and Marathon Oil (NYSE:MRO) are both energy companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Earnings & Valuation

This table compares Earthstone Energy and Marathon Oil’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Earthstone Energy $42.27 million 16.53 -$54.54 million ($2.13) -5.16
Marathon Oil $4.65 billion 3.27 -$2.14 billion ($2.56) -6.99

Earthstone Energy has higher earnings, but lower revenue than Marathon Oil. Marathon Oil is trading at a lower price-to-earnings ratio than Earthstone Energy, indicating that it is currently the more affordable of the two stocks.

Dividends

Marathon Oil pays an annual dividend of $0.20 per share and has a dividend yield of 1.1%. Earthstone Energy does not pay a dividend. Marathon Oil pays out -7.8% of its earnings in the form of a dividend.

Analyst Ratings

This is a summary of current ratings and price targets for Earthstone Energy and Marathon Oil, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Earthstone Energy 0 0 10 0 3.00
Marathon Oil 0 10 12 0 2.55

Earthstone Energy presently has a consensus target price of $14.70, suggesting a potential upside of 33.76%. Marathon Oil has a consensus target price of $16.61, suggesting a potential downside of 7.23%. Given Earthstone Energy’s stronger consensus rating and higher probable upside, research analysts clearly believe Earthstone Energy is more favorable than Marathon Oil.

Volatility & Risk

Earthstone Energy has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500. Comparatively, Marathon Oil has a beta of 2.38, meaning that its stock price is 138% more volatile than the S&P 500.

Institutional & Insider Ownership

13.4% of Earthstone Energy shares are owned by institutional investors. Comparatively, 80.3% of Marathon Oil shares are owned by institutional investors. 64.5% of Earthstone Energy shares are owned by company insiders. Comparatively, 0.4% of Marathon Oil shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Earthstone Energy and Marathon Oil’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Earthstone Energy -54.69% 4.01% 3.25%
Marathon Oil -48.58% -19.87% -10.18%

Summary

Earthstone Energy beats Marathon Oil on 9 of the 16 factors compared between the two stocks.

About Earthstone Energy

Earthstone Energy, Inc. is an independent oil and natural gas development and production company. The Company is also engaged in corporate mergers and the acquisition of oil and natural gas properties that have production and future development opportunities. Its operations are all in the upstream segment of the oil and natural gas industry and all its properties are onshore in the United States. The Company’s reserve portfolio primarily consists of assets in the Midland Basin of west Texas, the Eagle Ford trend of south Texas and in the Williston Basin of North Dakota. As of December 31, 2016, the Company held approximately 5,900 net leasehold acres in the Midland Basin, located in Howard, Glasscock, Martin and Midland Counties. As of December 31, 2016, it also has approximately 21,000 net leasehold acres in the Eagle Ford trend of south Texas. In the Williston Basin of North Dakota, it had approximately 5,900 net leasehold acres, as of December 31, 2016.

About Marathon Oil

Marathon Oil Corporation is an exploration and production (E&P) company. The Company operates through three segments: North America E&P, International E&P and Oil Sands Mining. The North America E&P segment explores for, produces and markets crude oil and condensate, natural gas liquids (NGLs) and natural gas in North America. The International E&P segment explores for, produces and markets crude oil and condensate, NGLs and natural gas outside of North America, and produces and markets products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol, in Equatorial Guinea (E.G.). The Oil Sands Mining segment mines, extracts and transports bitumen from oil sands deposits in Alberta, Canada, and upgrades the bitumen to produce and market synthetic crude oil and vacuum gas oil.

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