Head-To-Head Survey: Concho Resources (CXO) and Earthstone Energy (ESTE)

Concho Resources (NYSE: CXO) and Earthstone Energy (NYSE:ESTE) are both oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, valuation, risk, analyst recommendations, institutional ownership, earnings and profitability.

Volatility & Risk

Concho Resources has a beta of 1.08, meaning that its share price is 8% more volatile than the S&P 500. Comparatively, Earthstone Energy has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500.

Profitability

This table compares Concho Resources and Earthstone Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Concho Resources 24.19% 2.92% 1.87%
Earthstone Energy -54.69% 4.01% 3.25%

Valuation and Earnings

This table compares Concho Resources and Earthstone Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Concho Resources $1.63 billion 14.21 -$1.46 billion $3.76 41.54
Earthstone Energy $42.27 million 16.92 -$54.54 million ($2.13) -5.28

Earthstone Energy has lower revenue, but higher earnings than Concho Resources. Earthstone Energy is trading at a lower price-to-earnings ratio than Concho Resources, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

94.5% of Concho Resources shares are held by institutional investors. Comparatively, 13.4% of Earthstone Energy shares are held by institutional investors. 1.0% of Concho Resources shares are held by insiders. Comparatively, 64.5% of Earthstone Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Concho Resources and Earthstone Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Concho Resources 0 5 12 0 2.71
Earthstone Energy 0 0 9 0 3.00

Concho Resources presently has a consensus price target of $159.35, indicating a potential upside of 2.03%. Earthstone Energy has a consensus price target of $14.22, indicating a potential upside of 26.42%. Given Earthstone Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Earthstone Energy is more favorable than Concho Resources.

Summary

Earthstone Energy beats Concho Resources on 8 of the 14 factors compared between the two stocks.

Concho Resources Company Profile

Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The Company’s four operating areas include the Northern Delaware Basin, the Southern Delaware Basin, the Midland Basin and the New Mexico Shelf. As of December 31, 2016, the Company’s operations were focused in the Permian Basin, which underlies an area of Southeast New Mexico and West Texas approximately 250 miles wide and 300 miles long. The Permian Basin is an oil and natural gas producing region in the United States and is characterized by multiple producing horizons and enhanced recovery potential. As of December 31, 2016, the Company produced approximately 55.1 million barrels of oil equivalent (MMBoe) of oil and natural gas. As of December 31, 2016, all of its 720 MMBoe total estimated proved reserves were located in its core operating areas and consisted of approximately 59.5% oil and 40.5% natural gas.

Earthstone Energy Company Profile

Earthstone Energy, Inc. is an independent oil and natural gas development and production company. The Company is also engaged in corporate mergers and the acquisition of oil and natural gas properties that have production and future development opportunities. Its operations are all in the upstream segment of the oil and natural gas industry and all its properties are onshore in the United States. The Company’s reserve portfolio primarily consists of assets in the Midland Basin of west Texas, the Eagle Ford trend of south Texas and in the Williston Basin of North Dakota. As of December 31, 2016, the Company held approximately 5,900 net leasehold acres in the Midland Basin, located in Howard, Glasscock, Martin and Midland Counties. As of December 31, 2016, it also has approximately 21,000 net leasehold acres in the Eagle Ford trend of south Texas. In the Williston Basin of North Dakota, it had approximately 5,900 net leasehold acres, as of December 31, 2016.

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