Head-To-Head Review: SM Energy (NYSE:SM) vs. Evolution Petroleum (NYSE:EPM)

Evolution Petroleum (NYSE:EPM) and SM Energy (NYSE:SM) are both oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, earnings, dividends and risk.

Dividends

Evolution Petroleum pays an annual dividend of $0.48 per share and has a dividend yield of 9.3%. SM Energy pays an annual dividend of $0.80 per share and has a dividend yield of 2.6%. Evolution Petroleum pays out 960.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SM Energy pays out 12.0% of its earnings in the form of a dividend.

Risk & Volatility

Evolution Petroleum has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, SM Energy has a beta of 4.14, suggesting that its share price is 314% more volatile than the S&P 500.

Valuation and Earnings

This table compares Evolution Petroleum and SM Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Evolution Petroleum	$86.42 million	2.04	$4.08 million	$0.05	103.00
SM Energy	$2.67 billion	1.34	$817.88 million	$6.68	4.67

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

Analyst Recommendations

This is a summary of current ratings for Evolution Petroleum and SM Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Evolution Petroleum	0	0	1	1	3.50
SM Energy	0	6	6	1	2.62

Evolution Petroleum currently has a consensus price target of $6.50, suggesting a potential upside of 26.21%. SM Energy has a consensus price target of $49.00, suggesting a potential upside of 57.18%. Given SM Energy’s higher probable upside, analysts clearly believe SM Energy is more favorable than Evolution Petroleum.

Profitability

This table compares Evolution Petroleum and SM Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Evolution Petroleum	2.04%	2.42%	1.20%
SM Energy	28.63%	19.82%	10.59%

Insider & Institutional Ownership

60.1% of Evolution Petroleum shares are owned by institutional investors. Comparatively, 94.6% of SM Energy shares are owned by institutional investors. 10.1% of Evolution Petroleum shares are owned by insiders. Comparatively, 1.5% of SM Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

SM Energy beats Evolution Petroleum on 11 of the 16 factors compared between the two stocks.

About Evolution Petroleum

Evolution Petroleum Corporation, an energy company, engages in the development, production, ownership, and exploitation of onshore oil and gas properties in the United States. The company holds a non-operated interests in the SCOOP and STACK plays located in Central Oklahoma; the Chaveroo Field situated in Chaves and Roosevelt Counties, New Mexico; the Jonah Field located in Sublette County, Wyoming; the Williston Basin situated in Williston, North Dakota; the Barnett Shale field located in North Texas; the Hamilton Dome situated in Hot Springs County, Wyoming; and the Delhi Field, an onshore CO2-EOR project located in northeast Louisiana in Franklin, Madison, and Richland Parishes, as well as small overriding royalty interests in four onshore central Texas wells. The company was founded in 2003 and is based in Houston, Texas.

About SM Energy

SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in the state of Texas. It has working interests in oil and gas producing wells in the Midland Basin and South Texas. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado.