SM Energy (NYSE:SM) and Concho Resources (NYSE:CXO) are both oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.
Volatility and Risk
SM Energy has a beta of 5.46, suggesting that its stock price is 446% more volatile than the S&P 500. Comparatively, Concho Resources has a beta of 1.86, suggesting that its stock price is 86% more volatile than the S&P 500.
This table compares SM Energy and Concho Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings for SM Energy and Concho Resources, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
SM Energy currently has a consensus price target of $5.77, suggesting a potential upside of 185.48%. Concho Resources has a consensus price target of $78.05, suggesting a potential upside of 71.15%. Given SM Energy’s higher probable upside, equities analysts plainly believe SM Energy is more favorable than Concho Resources.
Valuation and Earnings
This table compares SM Energy and Concho Resources’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|SM Energy||$1.59 billion||0.15||-$187.00 million||($0.48)||-4.21|
|Concho Resources||$4.59 billion||1.95||-$705.00 million||$3.05||14.95|
SM Energy has higher earnings, but lower revenue than Concho Resources. SM Energy is trading at a lower price-to-earnings ratio than Concho Resources, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
91.3% of SM Energy shares are owned by institutional investors. Comparatively, 90.6% of Concho Resources shares are owned by institutional investors. 1.2% of SM Energy shares are owned by insiders. Comparatively, 1.1% of Concho Resources shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
SM Energy pays an annual dividend of $0.02 per share and has a dividend yield of 1.0%. Concho Resources pays an annual dividend of $0.80 per share and has a dividend yield of 1.8%. SM Energy pays out -4.2% of its earnings in the form of a dividend. Concho Resources pays out 26.2% 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. Concho Resources has raised its dividend for 1 consecutive years. Concho Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Concho Resources beats SM Energy on 10 of the 17 factors compared between the two stocks.
SM Energy Company Profile
SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of crude oil and condensate, natural gas, and natural gas liquids in onshore North America. As of December 31, 2018, the company had 503.4 million barrels of oil equivalent of estimated proved reserves; and working interests in 715 gross productive oil wells and 504 gross productive gas wells primarily in the Permian, South Texas, and Gulf Coast regions in the United States. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado.
Concho Resources Company Profile
Concho Resources, Inc. engages in the acquisition, development and exploration of oil and natural gas properties. Its operations include Delaware Basin, and Midland Basin. The company was founded on February 22, 2006 and is headquartered in Midland, TX.
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