Diamondback Energy (NASDAQ:FANG) and Concho Resources (NYSE:CXO) are both large-cap oils/energy companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, valuation, profitability, analyst recommendations, institutional ownership, risk and dividends.
Insider and Institutional Ownership
92.1% of Diamondback Energy shares are owned by institutional investors. Comparatively, 90.4% of Concho Resources shares are owned by institutional investors. 0.5% of Diamondback Energy shares are owned by company insiders. Comparatively, 1.1% of Concho Resources shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Dividends
Diamondback Energy pays an annual dividend of $1.50 per share and has a dividend yield of 2.2%. Concho Resources pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Diamondback Energy pays out 21.6% of its earnings in the form of a dividend. Concho Resources pays out 26.2% 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. Diamondback Energy has raised its dividend for 1 consecutive years. Diamondback Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Diamondback Energy has a beta of 2.59, indicating that its share price is 159% more volatile than the S&P 500. Comparatively, Concho Resources has a beta of 1.98, indicating that its share price is 98% more volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent recommendations for Diamondback Energy and Concho Resources, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Diamondback Energy | 0 | 3 | 22 | 1 | 2.92 |
Concho Resources | 0 | 9 | 14 | 0 | 2.61 |
Diamondback Energy presently has a consensus price target of $66.0893, indicating a potential downside of 4.61%. Concho Resources has a consensus price target of $67.90, indicating a potential upside of 3.51%. Given Concho Resources' higher possible upside, analysts plainly believe Concho Resources is more favorable than Diamondback Energy.
Profitability
This table compares Diamondback Energy and Concho Resources' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Diamondback Energy | -135.48% | 5.10% | 3.06% |
Concho Resources | -294.71% | 8.15% | 5.36% |
Valuation & Earnings
This table compares Diamondback Energy and Concho Resources' revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Diamondback Energy | $3.96 billion | 2.76 | $240 million | $6.93 | 10.00 |
Concho Resources | $4.59 billion | 2.80 | $-705,000,000.00 | $3.05 | 21.51 |
Diamondback Energy has higher earnings, but lower revenue than Concho Resources. Diamondback 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.
Summary
Diamondback Energy beats Concho Resources on 11 of the 18 factors compared between the two stocks.