Reviewing WPX Energy (WPX) and SandRidge Mississippian Trust II (SDR)
WPX Energy (NYSE: WPX) and SandRidge Mississippian Trust II (NYSE:SDR) are both mid-cap oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.
Risk & Volatility
WPX Energy has a beta of 2.46, indicating that its share price is 146% more volatile than the S&P 500. Comparatively, SandRidge Mississippian Trust II has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500.
This table compares WPX Energy and SandRidge Mississippian Trust II’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|SandRidge Mississippian Trust II||74.71%||13.88%||13.88%|
Institutional and Insider Ownership
97.9% of WPX Energy shares are held by institutional investors. Comparatively, 0.9% of SandRidge Mississippian Trust II shares are held by institutional investors. 1.4% of WPX Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Valuation and Earnings
This table compares WPX Energy and SandRidge Mississippian Trust II’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|WPX Energy||$693.00 million||7.12||-$601.00 million||($0.48)||-25.83|
|SandRidge Mississippian Trust II||$20.41 million||3.34||$16.09 million||$0.24||5.71|
SandRidge Mississippian Trust II has higher revenue, but lower earnings than WPX Energy. WPX Energy is trading at a lower price-to-earnings ratio than SandRidge Mississippian Trust II, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings for WPX Energy and SandRidge Mississippian Trust II, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|SandRidge Mississippian Trust II||0||0||0||0||N/A|
WPX Energy presently has a consensus price target of $15.38, indicating a potential upside of 24.05%. Given WPX Energy’s higher probable upside, equities research analysts plainly believe WPX Energy is more favorable than SandRidge Mississippian Trust II.
SandRidge Mississippian Trust II pays an annual dividend of $0.20 per share and has a dividend yield of 14.6%. WPX Energy does not pay a dividend. SandRidge Mississippian Trust II pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
WPX Energy beats SandRidge Mississippian Trust II on 8 of the 14 factors compared between the two stocks.
WPX Energy Company Profile
WPX Energy, Inc. is an oil and natural gas exploration and production company. The Company is engaged in the exploitation and development of unconventional properties. It operates in the exploration and production segment of the oil and gas industry and its operations are conducted in the United States. It is focused on exploiting, developing and growing its oil positions in the Delaware (a subset of the Permian Basin) and San Juan Basins in the southwestern United States and the Williston Basin in North Dakota. As of December 31, 2016, it operated 642 wells in the Delaware Basin and also owned interests in 783 wells operated by others. As of December 31, 2016, it held approximately 98,000 acres in the Delaware Basin, with operations located in Eddy, Lea and Chaves Counties in New Mexico and Loving, Pecos, Reeves, Ward and Winkler Counties in Texas. Its activity in the Delaware Basin is focused on the Wolfcamp Shale formation, the Bone Spring interval and the Delaware sand interval.
SandRidge Mississippian Trust II Company Profile
SandRidge Mississippian Trust II is a statutory trust. The royalty interests conveyed by SandRidge Energy, Inc. (SandRidge) from its interests in certain properties in the Mississippian formation in northern Oklahoma and southern Kansas and held by the Trust are referred to as the Royalty Interests. The Trust holds Royalty Interests in specified oil and natural gas properties. The Royalty Interests entitle the Trust to receive approximately 80% of the proceeds from the sale of oil, natural gas and natural gas liquids (NGLs) production attributable to SandRidge’s net revenue interest in approximately 50 wells producing and over 10 additional wells awaiting (together, the Initial Wells), and over 70% of the proceeds from the sale of oil, natural gas and NGL production attributable to SandRidge’s net revenue interest in approximately 200 horizontal oil and natural gas development wells drilled (the Trust Development Wells) within an area of mutual interest (AMI).
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