PDC Energy (NASDAQ: PDCE) and Diamondback Energy (NASDAQ:FANG) are both mid-cap energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, valuation, profitability, risk, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for PDC Energy and Diamondback Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PDC Energy 0 10 13 0 2.57
Diamondback Energy 0 3 20 0 2.87

PDC Energy currently has a consensus price target of $69.71, suggesting a potential upside of 43.09%. Diamondback Energy has a consensus price target of $121.90, suggesting a potential upside of 20.55%. Given PDC Energy’s higher probable upside, equities research analysts clearly believe PDC Energy is more favorable than Diamondback Energy.

Earnings and Valuation

This table compares PDC Energy and Diamondback Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PDC Energy $677.42 million 4.70 $550.18 million ($0.10) -487.15
Diamondback Energy $829.62 million 11.96 $676.65 million $3.36 30.10

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

Volatility and Risk

PDC Energy has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500. Comparatively, Diamondback Energy has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Profitability

This table compares PDC Energy and Diamondback Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PDC Energy 14.99% 6.14% 3.58%
Diamondback Energy 38.24% 8.09% 6.34%

Summary

Diamondback Energy beats PDC Energy on 10 of the 12 factors compared between the two stocks.

About PDC Energy

PDC Energy, Inc. is an independent exploration and production company. The Company produces, develops, acquires and explores for crude oil, natural gas and natural gas liquids (NGLs) with operations in the Wattenberg Field in Colorado and the Utica Shale in southeastern Ohio. The Company operates through two segments: Oil and Gas Exploration and Production, and Gas Marketing. The Company’s Oil and Gas Exploration and Production segment includes all of its crude oil and natural gas properties. The Company’s Gas Marketing segment purchases, aggregates and resells natural gas. The Company’s operations in the Wattenberg Field are focused on the horizontal Niobrara and Codell plays. Its Delaware Basin operations are focused in the Wolfcamp zones and its Ohio operations are focused in the Utica Shale play. As of December 31, 2016, the Company owned an interest in approximately 2,900 productive gross wells.

About Diamondback Energy

Diamondback Energy, Inc. is an independent oil and natural gas company. The Company focuses on the acquisition, development, exploration and exploitation of unconventional onshore oil and natural gas reserves in the Permian Basin in West Texas. As of December 31, 2016, the Company’s total net acreage position in the Permian Basin was approximately 105,894 net acres. As of December 31, 2016, the Company, through its subsidiary, Viper Energy Partners LP (Viper), owned mineral interests underlying approximately 107,568 gross acres primarily in Midland County, Texas in the Permian Basin. The Permian Basin area covers a portion of western Texas and eastern New Mexico. The Company’s reserves are located in the Permian Basin of West Texas, in particular in the Clearfork, Spraberry, Wolfcamp, Cline, Strawn and Atoka formations. The Company refers to the Clearfork, Spraberry, Wolfcamp, Strawn and Atoka formations collectively as the Wolfberry play.

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