Vaalco Energy (NYSE: EGY) and Cimarex Energy (NYSE:XEC) are both energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, dividends, institutional ownership, analyst recommendations and earnings.

Analyst Ratings

This is a summary of recent ratings and price targets for Vaalco Energy and Cimarex Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vaalco Energy 0 1 0 0 2.00
Cimarex Energy 1 8 16 0 2.60

Vaalco Energy presently has a consensus target price of $2.00, suggesting a potential upside of 127.27%. Cimarex Energy has a consensus target price of $136.75, suggesting a potential upside of 17.31%. Given Vaalco Energy’s higher possible upside, equities analysts clearly believe Vaalco Energy is more favorable than Cimarex Energy.

Profitability

This table compares Vaalco Energy and Cimarex Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vaalco Energy 3.43% 77.99% 4.27%
Cimarex Energy 20.45% 16.11% 8.04%

Dividends

Cimarex Energy pays an annual dividend of $0.32 per share and has a dividend yield of 0.3%. Vaalco Energy does not pay a dividend. Cimarex Energy pays out 8.0% of its earnings in the form of a dividend.

Institutional and Insider Ownership

38.9% of Vaalco Energy shares are owned by institutional investors. Comparatively, 93.4% of Cimarex Energy shares are owned by institutional investors. 2.6% of Vaalco Energy shares are owned by insiders. Comparatively, 1.7% of Cimarex Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Vaalco Energy has a beta of 0.32, suggesting that its share price is 68% less volatile than the S&P 500. Comparatively, Cimarex Energy has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.

Valuation & Earnings

This table compares Vaalco Energy and Cimarex Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Vaalco Energy $59.78 million 0.87 -$26.55 million $0.08 11.00
Cimarex Energy $1.26 billion 8.83 -$408.80 million $4.00 29.14

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

Summary

Cimarex Energy beats Vaalco Energy on 11 of the 16 factors compared between the two stocks.

Vaalco Energy Company Profile

VAALCO Energy, Inc. is an independent energy company. The Company is engaged in the acquisition, exploration, development and production of crude oil and natural gas. Its segments include Gabon, Angola, Equatorial Guinea, the United States, and Corporate and other, which includes corporate and operations support. It owns producing properties and conducts exploration activities as an operator in Gabon, West Africa; conducts exploration activities as an operator in Angola, West Africa, and participates in exploration and development activities as a non-operator in Equatorial Guinea, West Africa. In the United States, it operates unconventional resource properties in North Texas and hold undeveloped leasehold acreage in Montana. It also owns minor interests in conventional production activities as a non-operator in the United States. Its Etame Marin block is located offshore the Republic of Gabon. It owns over 640-acre lease in the Hefley field (Granite Wash formation) in North Texas.

Cimarex Energy Company Profile

Cimarex Energy Co. is an independent oil and gas exploration and production company. The Company operates in exploration and production (E&P) segment. Its operations are located in Oklahoma, Texas and New Mexico. Its E&P activities take place primarily in two areas: the Permian Basin and the Mid-Continent region. Its Permian Basin region encompasses west Texas and southeast New Mexico. Its Mid-Continent region consists of Oklahoma and the Texas Panhandle. As of fiscal year ended December 31, 2016 (fiscal 2016), its activities in the Mid-Continent were focused in the Woodford shale and the Meramec horizon, both in Oklahoma. During fiscal 2016, production from the Mid-Continent averaged 457 millions of cubic feet equivalent (MMcfe) per day, or 47% of total company production. All of the Company’s oil and gas assets are located in the United States. As of December 31, 2016, 63% of its total proved reserves were located in the Mid-Continent region and 37% were in the Permian Basin.

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