Callon Petroleum Company (NYSE: CPE) and Chesapeake Granite Wash Trust (NYSE:CHKR) are both oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitabiliy, valuation, institutional ownership, analyst recommendations and earnings.

Profitability

This table compares Callon Petroleum Company and Chesapeake Granite Wash Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Callon Petroleum Company -1.42% 4.23% 3.09%
Chesapeake Granite Wash Trust 84.03% 31.59% 31.59%

Dividends

Chesapeake Granite Wash Trust pays an annual dividend of $0.40 per share and has a dividend yield of 17.0%. Callon Petroleum Company does not pay a dividend. Chesapeake Granite Wash Trust pays out 137.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of current ratings for Callon Petroleum Company and Chesapeake Granite Wash Trust, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Callon Petroleum Company 0 2 19 0 2.90
Chesapeake Granite Wash Trust 0 0 0 0 N/A

Callon Petroleum Company currently has a consensus target price of $18.10, suggesting a potential upside of 78.63%. Given Callon Petroleum Company’s higher probable upside, equities research analysts clearly believe Callon Petroleum Company is more favorable than Chesapeake Granite Wash Trust.

Institutional and Insider Ownership

0.9% of Chesapeake Granite Wash Trust shares are held by institutional investors. 0.8% of Callon Petroleum Company shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Callon Petroleum Company has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500. Comparatively, Chesapeake Granite Wash Trust has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500.

Valuation & Earnings

This table compares Callon Petroleum Company and Chesapeake Granite Wash Trust’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Callon Petroleum Company $235.96 million 8.63 $163.46 million ($0.27) -37.52
Chesapeake Granite Wash Trust $11.63 million 9.44 $13.56 million $0.29 8.10

Callon Petroleum Company has higher revenue and earnings than Chesapeake Granite Wash Trust. Callon Petroleum Company is trading at a lower price-to-earnings ratio than Chesapeake Granite Wash Trust, indicating that it is currently the more affordable of the two stocks.

Summary

Callon Petroleum Company beats Chesapeake Granite Wash Trust on 8 of the 15 factors compared between the two stocks.

Callon Petroleum Company Company Profile

Callon Petroleum Company is an independent oil and natural gas company. The Company is engaged in the exploration, development, acquisition and production of oil and natural gas properties. The Company focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin. The Permian Basin is located in West Texas and southeastern New Mexico and consisted of three primary sub-basins: the Midland Basin, the Delaware Basin, and the Central Basin Platform as of December 31, 2016. The Company’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. It owns additional immaterial properties in Louisiana. As of December 31, 2016, the Company had owned leaseholds in 39,570 net acres in the Permian Basin, all of which was located in the Midland Basin.

Chesapeake Granite Wash Trust Company Profile

Chesapeake Granite Wash Trust (the Trust) is a trust formed to own royalty interests for the benefit of Trust unit holders. The royalty interests held by the Trust (Royalty Interests) are derived from Chesapeake Energy Corporation’s (Chesapeake) interests in specified oil and natural gas properties located in the Colony Granite Wash play in Washita County. Chesapeake conveyed the Royalty Interests to the Trust from its interests in approximately 70 existing horizontal wells (Producing Wells) and Chesapeake’s interests in over 120 horizontal development wells (Development Wells) to be drilled on properties within the Area of Mutual Interest (AMI). The AMI lies within Washita County in western Oklahoma and is limited to Colony Granite Wash formation, where Chesapeake holds approximately 40,500 gross acres. Chesapeake has drilled and completed over 90 wells within the AMI. The Colony Granite Wash is located at the eastern end of Des Moines-age granite wash fields.

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