Gastar Exploration (NYSE: GST) and Stone Energy Corporation (NYSE:SGY) are both small-cap basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and price targets for Gastar Exploration and Stone Energy Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gastar Exploration 0 4 1 0 2.20
Stone Energy Corporation 0 2 1 0 2.33

Gastar Exploration currently has a consensus target price of $1.40, suggesting a potential upside of 70.73%. Stone Energy Corporation has a consensus target price of $6.25, suggesting a potential downside of 78.76%. Given Gastar Exploration’s higher possible upside, research analysts clearly believe Gastar Exploration is more favorable than Stone Energy Corporation.

Insider & Institutional Ownership

96.4% of Stone Energy Corporation shares are held by institutional investors. 3.5% of Stone Energy Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Gastar Exploration and Stone Energy Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gastar Exploration N/A N/A N/A
Stone Energy Corporation 41.74% -215.45% 29.97%

Earnings and Valuation

This table compares Gastar Exploration and Stone Energy Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gastar Exploration $64.50 million 2.54 $36.39 million N/A N/A
Stone Energy Corporation $364.82 million 1.61 $201.90 million N/A N/A

Stone Energy Corporation has higher revenue and earnings than Gastar Exploration.

Summary

Stone Energy Corporation beats Gastar Exploration on 7 of the 10 factors compared between the two stocks.

About Gastar Exploration

Gastar Exploration Inc., an independent energy company, engages in the exploration, development, and production of oil, condensate, natural gas, and natural gas liquids in the United States. Its principal activities include the identification, acquisition, exploration, and development of oil and natural gas properties on unconventional reserves, such as shale resource plays. The company holds interests in the oil and natural gas-rich reservoirs, including the Meramec and Osage, the Oswego limestone, the Woodford shale, and Hunton limestone formations. As of December 31, 2016, its principal assets included the STACK play covering approximately 83,800 net acres located in the Mid-Continent area of the United States, as well as approximately 14,500 net acres in the Appalachian Basin in West Virginia. The company was formerly known as Gastar Exploration Ltd. and changed its name to Gastar Exploration Inc. in January 2014. Gastar Exploration Inc. is based in Houston, Texas.

About Stone Energy Corporation

Stone Energy Corporation is an independent oil and natural gas company. The Company is engaged in the acquisition, exploration, exploitation, development and operation of oil and gas properties. The Company operates in the Gulf of Mexico (GOM) basin. It has leveraged its operations in the GOM conventional shelf and has its reserve base in the prolific basins of the GOM deep water, Gulf Coast deep gas, and the Marcellus and Utica shales in Appalachia. Its estimated proved oil and natural gas reserves are over 60 million barrels of oil equivalents (MMBoe) or 340 billion cubic feet equivalent (Bcfe). Over 95 MMBoe or 570 Bcfe of its estimated proved reserves are revised downward. It has made investments in seismic data and leasehold interests, and has geological, geophysical, engineering and operational operations in deep water arena to evaluate potential exploration, development and acquisition opportunities. It holds over two deep water platforms, producing reserves and various leases.

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