Critical Analysis: Baytex Energy (NYSE:BTE) & Tourmaline Oil (OTCMKTS:TRMLF)

Tourmaline Oil (OTCMKTS:TRMLF) and Baytex Energy (NYSE:BTE) are both energy companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Insider & Institutional Ownership

1.8% of Tourmaline Oil shares are owned by institutional investors. Comparatively, 46.2% of Baytex Energy shares are owned by institutional investors. 0.8% of Baytex Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings for Tourmaline Oil and Baytex Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tourmaline Oil	0	6	3	2	2.64
Baytex Energy	1	6	3	1	2.36

Tourmaline Oil currently has a consensus price target of $65.00, suggesting a potential upside of 42.20%. Given Tourmaline Oil’s stronger consensus rating and higher probable upside, equities analysts clearly believe Tourmaline Oil is more favorable than Baytex Energy.

Profitability

This table compares Tourmaline Oil and Baytex Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tourmaline Oil	10.27%	10.46%	7.24%
Baytex Energy	-24.25%	-10.85%	-6.38%

Valuation and Earnings

This table compares Tourmaline Oil and Baytex Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tourmaline Oil	$4.72 billion	3.76	$187.99 million	$1.36	33.61
Baytex Energy	$1.68 billion	2.05	-$432.12 million	($0.70)	-6.81

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

Dividends

Tourmaline Oil pays an annual dividend of $1.47 per share and has a dividend yield of 3.2%. Baytex Energy pays an annual dividend of $0.06 per share and has a dividend yield of 1.3%. Tourmaline Oil pays out 108.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Baytex Energy pays out -8.6% of its earnings in the form of a dividend.

Volatility and Risk

Tourmaline Oil has a beta of -0.28, meaning that its stock price is 128% less volatile than the S&P 500. Comparatively, Baytex Energy has a beta of 0.37, meaning that its stock price is 63% less volatile than the S&P 500.

Summary

Tourmaline Oil beats Baytex Energy on 12 of the 16 factors compared between the two stocks.

About Tourmaline Oil

Tourmaline Oil Corp. explores for and develops oil and natural gas properties in the Western Canadian Sedimentary Basin. The company holds interests in properties located in the Alberta Deep Basin, Northeast British Columbia Montney, and the Peace River High Triassic oil complex. Tourmaline Oil Corp. was incorporated in 2008 and is headquartered in Calgary, Canada.

About Baytex Energy

Baytex Energy Corp. is an oil & gas exploration and production company. The firm engages in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States. The company was founded on June 3, 1993 and is headquartered in Calgary, Canada.