Devon Energy (NYSE:DVN) and Diamondback Energy (NASDAQ:FANG) are both large-cap oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.
Valuation & Earnings
This table compares Devon Energy and Diamondback Energy's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Devon Energy | $6.22 billion | 2.56 | $-355,000,000.00 | $1.38 | 17.12 |
Diamondback Energy | $3.96 billion | 3.24 | $240 million | $6.93 | 11.73 |
Diamondback Energy has lower revenue, but higher earnings than Devon Energy. Diamondback Energy is trading at a lower price-to-earnings ratio than Devon Energy, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of recent ratings and recommmendations for Devon Energy and Diamondback Energy, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Devon Energy | 0 | 2 | 17 | 1 | 2.95 |
Diamondback Energy | 0 | 3 | 22 | 1 | 2.92 |
Devon Energy currently has a consensus target price of $18.2143, suggesting a potential downside of 22.89%. Diamondback Energy has a consensus target price of $66.0893, suggesting a potential downside of 18.67%. Given Diamondback Energy's higher probable upside, analysts plainly believe Diamondback Energy is more favorable than Devon Energy.
Dividends
Devon Energy pays an annual dividend of $0.44 per share and has a dividend yield of 1.9%. Diamondback Energy pays an annual dividend of $1.50 per share and has a dividend yield of 1.8%. Devon Energy pays out 31.9% of its earnings in the form of a dividend. Diamondback Energy pays out 21.6% 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. Devon Energy has raised its dividend for 3 consecutive years and Diamondback Energy has raised its dividend for 1 consecutive years. Devon Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
Devon Energy has a beta of 3.46, indicating that its stock price is 246% more volatile than the S&P 500. Comparatively, Diamondback Energy has a beta of 2.59, indicating that its stock price is 159% more volatile than the S&P 500.
Insider & Institutional Ownership
80.9% of Devon Energy shares are held by institutional investors. Comparatively, 92.1% of Diamondback Energy shares are held by institutional investors. 0.6% of Devon Energy shares are held by company insiders. Comparatively, 0.5% of Diamondback Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Profitability
This table compares Devon Energy and Diamondback Energy's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Devon Energy | -62.68% | 2.38% | 0.86% |
Diamondback Energy | -135.48% | 5.10% | 3.06% |
Summary
Diamondback Energy beats Devon Energy on 9 of the 17 factors compared between the two stocks.