Financial Analysis: EOG Resources (NYSE:EOG) & SandRidge Energy (NYSE:SD)

SandRidge Energy (NYSE:SD) and EOG Resources (NYSE:EOG) are both energy companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, dividends, valuation and profitability.

Analyst Ratings

This is a breakdown of current ratings and price targets for SandRidge Energy and EOG Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SandRidge Energy	0	0	0	0	0.00
EOG Resources	0	10	8	1	2.53

EOG Resources has a consensus target price of $140.63, indicating a potential upside of 19.96%. Given EOG Resources’ stronger consensus rating and higher possible upside, analysts plainly believe EOG Resources is more favorable than SandRidge Energy.

Dividends

SandRidge Energy pays an annual dividend of $0.44 per share and has a dividend yield of 4.1%. EOG Resources pays an annual dividend of $3.90 per share and has a dividend yield of 3.3%. SandRidge Energy pays out 25.1% of its earnings in the form of a dividend. EOG Resources pays out 36.2% 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. SandRidge Energy has increased its dividend for 2 consecutive years and EOG Resources has increased its dividend for 8 consecutive years. SandRidge Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

61.8% of SandRidge Energy shares are held by institutional investors. Comparatively, 89.9% of EOG Resources shares are held by institutional investors. 1.2% of SandRidge Energy shares are held by insiders. Comparatively, 0.1% of EOG Resources shares are held by 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.

Volatility & Risk

SandRidge Energy has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, EOG Resources has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.

Profitability

This table compares SandRidge Energy and EOG Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SandRidge Energy	39.25%	7.92%	6.34%
EOG Resources	29.18%	23.77%	15.24%

Earnings and Valuation

This table compares SandRidge Energy and EOG Resources”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SandRidge Energy	$137.61 million	2.88	$60.86 million	$1.75	6.18
EOG Resources	$23.39 billion	2.74	$7.59 billion	$10.78	10.87

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

Summary

EOG Resources beats SandRidge Energy on 12 of the 18 factors compared between the two stocks.

About SandRidge Energy

SandRidge Energy, Inc. engages in the acquisition, development, and production of oil, natural gas, and natural gas liquids in the United States Mid-Continent. The company was incorporated in 2006 and is headquartered in Oklahoma City, Oklahoma.

About EOG Resources

EOG Resources, Inc., together with its subsidiaries, explores for, develops, produces, and markets crude oil, natural gas liquids, and natural gas primarily in producing basins in the United States, the Republic of Trinidad and Tobago and internationally. The company was formerly known as Enron Oil & Gas Company. EOG Resources, Inc. was incorporated in 1985 and is headquartered in Houston, Texas.