Analyzing Continental Resources (CLR) and Legacy Reserves (LGCY)
Continental Resources (NYSE: CLR) and Legacy Reserves (NASDAQ:LGCY) are both oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, risk, dividends, institutional ownership and profitability.
Institutional and Insider Ownership
23.3% of Continental Resources shares are held by institutional investors. Comparatively, 20.6% of Legacy Reserves shares are held by institutional investors. 76.9% of Continental Resources shares are held by company insiders. Comparatively, 26.7% of Legacy Reserves shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Volatility and Risk
Continental Resources has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500. Comparatively, Legacy Reserves has a beta of 2.5, indicating that its stock price is 150% more volatile than the S&P 500.
This is a summary of current ratings and price targets for Continental Resources and Legacy Reserves, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Continental Resources currently has a consensus price target of $46.39, suggesting a potential upside of 17.82%. Legacy Reserves has a consensus price target of $1.88, suggesting a potential upside of 22.29%. Given Legacy Reserves’ higher probable upside, analysts plainly believe Legacy Reserves is more favorable than Continental Resources.
Earnings and Valuation
This table compares Continental Resources and Legacy Reserves’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Continental Resources||$2.37 billion||6.17||$1.75 billion||($0.40)||-98.42|
|Legacy Reserves||$367.53 million||0.31||$160.94 million||($1.72)||-0.90|
Continental Resources has higher revenue and earnings than Legacy Reserves. Continental Resources is trading at a lower price-to-earnings ratio than Legacy Reserves, indicating that it is currently the more affordable of the two stocks.
This table compares Continental Resources and Legacy Reserves’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Continental Resources beats Legacy Reserves on 10 of the 13 factors compared between the two stocks.
About Continental Resources
Continental Resources, Inc. is a crude oil and natural gas company with properties in the North, South and East regions of the United States. The North region consists of properties north of Kansas and west of the Mississippi River and includes North Dakota Bakken, Montana Bakken and the Red River units. The South region includes properties south of Nebraska and west of the Mississippi River including various plays in the South Central Oklahoma Oil Province (SCOOP), Sooner Trend Anadarko Canadian Kingfisher (STACK), and Arkoma Woodford areas of Oklahoma. The East region is consists of undeveloped leasehold acreage east of the Mississippi River with no drilling or production operations. As of December 31, 2016, its estimated proved reserves were 1,275 million barrels of oil equivalent (MMBoe), with estimated proved developed reserves of 519 MMBoe. As of December 31, 2016, its average daily production from South region properties was 91,088 barrels of oil equivalent (Boe) per day.
About Legacy Reserves
Legacy Reserves LP (Legacy) is a master limited partnership company. The Company focuses on the acquisition and development of oil and natural gas properties located in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions of the United States. As of December 31, 2016, the Company had proved reserves of approximately 144.8 million barrels of crude oil equivalent (MMBoe), of which 72% were natural gas, 28% were oil and natural gas liquids (NGLs) and 94% were classified as proved developed producing. As of December 31, 2016, the Company owned interests in producing oil and natural gas properties in 627 fields in the Permian Basin, East Texas, Piceance Basin of Colorado, Texas Panhandle, Wyoming, North Dakota, Montana, Oklahoma and various other states, from 10,775 gross productive wells, of which 3,799 were operated and 6,976 were non-operated. The Company’s fields and regions include East Texas, Piceance Basin, Spraberry/War San, Lea, Texas Panhandle and Deep Rock.
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