Penn West Petroleum (NYSE: OBE) and Resolute Energy Corporation (NYSE:REN) are both small-cap oils/energy companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitabiliy, analyst recommendations and earnings.

Profitability

This table compares Penn West Petroleum and Resolute Energy Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Penn West Petroleum -95.25% -22.87% -14.47%
Resolute Energy Corporation -35.56% N/A -18.45%

Valuation & Earnings

This table compares Penn West Petroleum and Resolute Energy Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Penn West Petroleum N/A N/A N/A ($0.85) -1.39
Resolute Energy Corporation $210.70 million 3.39 $36.32 million ($4.90) -6.61

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

Risk and Volatility

Penn West Petroleum has a beta of 4.7, meaning that its share price is 370% more volatile than the S&P 500. Comparatively, Resolute Energy Corporation has a beta of 3.38, meaning that its share price is 238% more volatile than the S&P 500.

Institutional and Insider Ownership

19.7% of Penn West Petroleum shares are held by institutional investors. Comparatively, 86.2% of Resolute Energy Corporation shares are held by institutional investors. 7.7% of Resolute Energy Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Penn West Petroleum and Resolute Energy Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Penn West Petroleum 0 6 1 0 2.14
Resolute Energy Corporation 0 3 10 0 2.77

Penn West Petroleum currently has a consensus price target of $2.46, suggesting a potential upside of 108.69%. Resolute Energy Corporation has a consensus price target of $43.55, suggesting a potential upside of 34.40%. Given Penn West Petroleum’s higher probable upside, research analysts clearly believe Penn West Petroleum is more favorable than Resolute Energy Corporation.

Summary

Resolute Energy Corporation beats Penn West Petroleum on 7 of the 11 factors compared between the two stocks.

Penn West Petroleum Company Profile

Obsidian Energy Ltd, formerly Penn West Petroleum Ltd, is a Canada-based conventional oil and natural gas producer and development and production company. The Company operates a portfolio of opportunities with an oil position in the Cardium, Viking and Peace River areas of Alberta. The Alberta Viking area offers a mix of light-oil and gas with high-netback shorter cycle wells to complement longer cycle activities in the Cardium. The Cardium is concentrated on the low-decline and high-netback light-oil production. The Company is focused on an integrated waterflood approach in which it maintain reservoir pressure from the start of production to reduce decline rates on new wells. The Peace River operates in a crude oil resource industry.

Resolute Energy Corporation Company Profile

Resolute Energy Corporation is an independent oil and gas company. The Company is engaged in the exploitation, development, exploration for and acquisition of oil and gas properties. The Company’s assets are located primarily in the Delaware Basin in west Texas (the Permian Properties or Permian Basin Properties) and Aneth Field located in the Paradox Basin in southeast Utah (the Aneth Field Properties or Aneth Field). The Company has an interest in gas gathering and compression facilities located within and adjacent to its Aneth Field Properties. The Aneth field is an oil field located in southeast Utah. The Aneth field is connected by pipeline to a refinery located near Gallup, New Mexico. As of December 31, 2016, the Company had interests in approximately 23,900 gross (20,000 net) acres in the Permian Basin of Texas and southeast New Mexico.

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