Financial Review: ConocoPhillips (COP) and Viper Energy Partners (VNOM)
ConocoPhillips (NYSE: COP) and Viper Energy Partners (NASDAQ:VNOM) are both mid-cap oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, profitability, institutional ownership, valuation and earnings.
ConocoPhillips pays an annual dividend of $1.06 per share and has a dividend yield of 2.1%. Viper Energy Partners pays an annual dividend of $1.33 per share and has a dividend yield of 7.0%. ConocoPhillips pays out -35.0% of its earnings in the form of a dividend. Viper Energy Partners pays out 175.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Earnings & Valuation
This table compares ConocoPhillips and Viper Energy Partners’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|ConocoPhillips||$28.02 billion||2.14||$7.50 billion||($3.03)||-16.27|
|Viper Energy Partners||$118.19 million||18.26||$104.04 million||$0.76||24.93|
ConocoPhillips has higher revenue and earnings than Viper Energy Partners. ConocoPhillips is trading at a lower price-to-earnings ratio than Viper Energy Partners, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
ConocoPhillips has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, Viper Energy Partners has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.
This is a breakdown of current ratings and target prices for ConocoPhillips and Viper Energy Partners, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Viper Energy Partners||0||1||9||1||3.00|
ConocoPhillips presently has a consensus target price of $54.60, indicating a potential upside of 10.73%. Viper Energy Partners has a consensus target price of $20.82, indicating a potential upside of 9.86%. Given ConocoPhillips’ higher possible upside, equities research analysts clearly believe ConocoPhillips is more favorable than Viper Energy Partners.
Institutional & Insider Ownership
68.9% of ConocoPhillips shares are owned by institutional investors. Comparatively, 15.6% of Viper Energy Partners shares are owned by institutional investors. 0.8% of ConocoPhillips shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
This table compares ConocoPhillips and Viper Energy Partners’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Viper Energy Partners||58.60%||11.19%||10.11%|
ConocoPhillips beats Viper Energy Partners on 8 of the 15 factors compared between the two stocks.
ConocoPhillips is an independent exploration and production company. The Company explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG) and natural gas liquids. The Company operates through five segments: Alaska, Lower 48, Canada, Europe and North Africa, Asia Pacific and Middle East, and Other International. The Alaska segment explores for, produces, transports and markets crude oil, natural gas liquids, natural gas and LNG. The Lower 48 segment consists of operations located in the United States Lower 48 states and the Gulf of Mexico. Its Canadian operations consists of oil sands developments in the Athabasca Region of northeastern Alberta. The Europe and North Africa segment consists of operations and exploration activities in Norway, the United Kingdom and Libya. The Asia Pacific and Middle East segment has exploration and production operations in China, Indonesia, Malaysia and Australia.
About Viper Energy Partners
Viper Energy Partners LP is engaged in owning, acquiring and exploiting oil and natural gas properties in North America. The Company’s assets are located in the Permian Basin of West Texas. As of December 31, 2016, the Permian Basin consisted of approximately 85,000 square miles. As of December 31, 2016, its assets consisted of mineral interests underlying 107,568 gross acres in the Permian Basin. As of December 31, 2016, there were 545 vertical wells and 190 horizontal wells producing on this acreage. As of December 31, 2016, its estimated proved oil and natural gas reserves of its assets was 31,435 thousand barrels of crude oil equivalent (MBOE). As of December 31, 2016, the Company’s proved reserves were approximately 68% oil, 18% natural gas liquids and 14% natural gas. In addition to its mineral interests, the Company owns a minor equity interest in an entity that owns mineral, overriding royalty, net profits, leasehold and other similar interests.
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