Circle Star Energy (OTCMKTS: CRCL) and Stone Energy (NYSE:SGY) are both small-cap basic materials companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, earnings, dividends, analyst recommendations, institutional ownership and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for Circle Star Energy and Stone Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Circle Star Energy 0 0 0 0 N/A
Stone Energy 0 3 1 0 2.25

Stone Energy has a consensus price target of $5.08, indicating a potential downside of 80.85%. Given Stone Energy’s higher possible upside, analysts plainly believe Stone Energy is more favorable than Circle Star Energy.

Profitability

This table compares Circle Star Energy and Stone Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Circle Star Energy -126.19% N/A -60.51%
Stone Energy 68.43% 590.23% 37.33%

Risk & Volatility

Circle Star Energy has a beta of 1.21, meaning that its stock price is 21% more volatile than the S&P 500. Comparatively, Stone Energy has a beta of 1.65, meaning that its stock price is 65% more volatile than the S&P 500.

Institutional & Insider Ownership

97.1% of Stone Energy shares are held by institutional investors. 3.5% of Stone Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Circle Star Energy and Stone Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Circle Star Energy N/A N/A N/A GBX (0.02) ($0.00) -0.01
Stone Energy $377.39 million 1.41 -$590.58 million N/A N/A

Circle Star Energy has higher earnings, but lower revenue than Stone Energy.

Summary

Stone Energy beats Circle Star Energy on 9 of the 9 factors compared between the two stocks.

About Circle Star Energy

Circle Star Energy Corp. is an oil and gas exploration and production company. The Company owns a variety of non-operated working interests and overriding royalty interests in approximately 61 producing wells in Texas. The interests range from less than 1% up to approximately 5% in each well. The wells are located in the following areas: Permian Basin, Eagle Ford Shale, Pearsall Field, Giddings Field and the Woodbine Field. The wells are operated by Apache (Permian), EXCO (Eagle Ford Shale), CML (Giddings, Pearsall and Permian), Leexus (Giddings) and MD America Energy, LLC. (Woodbine). The Company has approximately 430 net leased acres in Texas. The Company operates four producing wells in Trego County, Kansas. The Company owns between a 25% and 55% working interest in these four wells. The Company has approximately 6,120 net leased acres in Kansas, of which approximately 1,440 are located in Trego County and approximately 4680 are located in Sheridan County.

About Stone Energy

Stone Energy Corporation is an independent oil and natural gas company. The Company is engaged in the acquisition, exploration, exploitation, development and operation of oil and gas properties. The Company operates in the Gulf of Mexico (GOM) basin. It has leveraged its operations in the GOM conventional shelf and has its reserve base in the prolific basins of the GOM deep water, Gulf Coast deep gas, and the Marcellus and Utica shales in Appalachia. Its estimated proved oil and natural gas reserves are over 60 million barrels of oil equivalents (MMBoe) or 340 billion cubic feet equivalent (Bcfe). Over 95 MMBoe or 570 Bcfe of its estimated proved reserves are revised downward. It has made investments in seismic data and leasehold interests, and has geological, geophysical, engineering and operational operations in deep water arena to evaluate potential exploration, development and acquisition opportunities. It holds over two deep water platforms, producing reserves and various leases.

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