Newfield Exploration (NYSE: NFX) and SM Energy (NYSE:SM) are both oils/energy companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Earnings and Valuation

This table compares Newfield Exploration and SM Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Newfield Exploration $1.63 billion 3.71 $903.00 million $1.53 19.85
SM Energy $1.24 billion 1.62 $622.71 million ($3.13) -5.75

Newfield Exploration has higher revenue and earnings than SM Energy. SM Energy is trading at a lower price-to-earnings ratio than Newfield Exploration, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Newfield Exploration and SM Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Newfield Exploration 18.82% 33.17% 7.88%
SM Energy -20.67% -3.11% -1.19%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Newfield Exploration and SM Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Newfield Exploration 1 5 18 0 2.71
SM Energy 0 7 9 0 2.56

Newfield Exploration currently has a consensus target price of $40.81, indicating a potential upside of 34.37%. SM Energy has a consensus target price of $31.77, indicating a potential upside of 76.59%. Given SM Energy’s higher possible upside, analysts plainly believe SM Energy is more favorable than Newfield Exploration.

Institutional and Insider Ownership

99.2% of Newfield Exploration shares are owned by institutional investors. Comparatively, 97.1% of SM Energy shares are owned by institutional investors. 0.5% of Newfield Exploration shares are owned by company insiders. Comparatively, 0.9% of SM Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

SM Energy pays an annual dividend of $0.10 per share and has a dividend yield of 0.6%. Newfield Exploration does not pay a dividend. SM Energy pays out -3.2% of its earnings in the form of a dividend.

Volatility & Risk

Newfield Exploration has a beta of 1.53, indicating that its stock price is 53% more volatile than the S&P 500. Comparatively, SM Energy has a beta of 2.97, indicating that its stock price is 197% more volatile than the S&P 500.

Summary

Newfield Exploration beats SM Energy on 10 of the 15 factors compared between the two stocks.

About Newfield Exploration

Newfield Exploration Company is an independent exploration and production company. It is engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. Its operating segments are the United States and China. Its the United States operations are onshore and focus primarily on large scale, liquids resource plays. Its principal areas of operation are the Anadarko and Arkoma basins of Oklahoma, the Williston Basin of North Dakota and the Uinta Basin of Utah. It has oil producing assets offshore China. As of December 31, 2016, its proved reserves of 513 million barrels of oil equivalents (MMBOE) consisted of 304 MMBOE proved developed producing, 10 MMBOE proved developed non-producing and 199 MMBOE proved undeveloped reserves. As of December 31, 2016, its proved liquids reserves were 285 million barrels of crude oil or other liquid hydrocarbons. As of December 31, 2016, 67% of its proved liquids reserves were crude oil or condensate.

About SM Energy

SM Energy Company is an independent energy company. The Company is engaged in the acquisition, exploration, development and production of crude oil and condensate, natural gas and natural gas liquids in onshore North America. It operates in the exploration and production segment of the oil and gas industry within the United States. Its operations are concentrated in onshore operating areas in the United States, which include South Texas and Gulf Coast Region, Rocky Mountain Region and Permian Region. It has working interests in approximately 1,027 gross productive oil wells and approximately 1,882 gross productive gas wells. Its South Texas and Gulf Coast Region has both operated and non-operated Eagle Ford shale program. It has approximately 124,000 net acres in Divide County, North Dakota, and approximately 156,000 net acres in the Powder River Basin. Its Permian Region closed multiple transactions in the Midland Basin in west Texas acquiring approximately 62,000 net acres.

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