BP (NYSE:BP) and Chevron (NYSE:CVX) are both large-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.
Institutional & Insider Ownership
9.2% of BP shares are held by institutional investors. Comparatively, 66.0% of Chevron shares are held by institutional investors. 1.0% of BP shares are held by insiders. Comparatively, 0.3% of Chevron shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Analyst Recommendations
This is a summary of current ratings and price targets for BP and Chevron, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| BP | 3 | 7 | 11 | 0 | 2.38 |
| Chevron | 0 | 8 | 16 | 0 | 2.67 |
BP presently has a consensus price target of $28.70, suggesting a potential upside of 3.80%. Chevron has a consensus price target of $114.88, suggesting a potential upside of 7.27%. Given Chevron's stronger consensus rating and higher probable upside, analysts plainly believe Chevron is more favorable than BP.
Profitability
This table compares BP and Chevron's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| BP | -7.03% | -4.52% | -1.45% |
| Chevron | -8.15% | -0.82% | -0.47% |
Valuation and Earnings
This table compares BP and Chevron's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| BP | $183.50 billion | 0.51 | $-20,305,000,000.00 | ($1.69) | -16.45 |
| Chevron | $94.69 billion | 2.19 | $-5,543,000,000.00 | ($0.20) | -538.65 |
Chevron has lower revenue, but higher earnings than BP. Chevron is trading at a lower price-to-earnings ratio than BP, indicating that it is currently the more affordable of the two stocks.
Dividends
BP pays an annual dividend of $1.24 per share and has a dividend yield of 4.5%. Chevron pays an annual dividend of $5.36 per share and has a dividend yield of 5.0%. BP pays out -73.4% of its earnings in the form of a dividend. Chevron pays out -2,680.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. BP has raised its dividend for 1 consecutive years and Chevron has raised its dividend for 34 consecutive years. Chevron is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
BP has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500. Comparatively, Chevron has a beta of 1.31, indicating that its share price is 31% more volatile than the S&P 500.
Summary
Chevron beats BP on 13 of the 17 factors compared between the two stocks.
