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

Insider and Institutional Ownership

19.7% of Penn West Petroleum shares are owned by institutional investors. Comparatively, 86.6% of Resolute Energy Corporation shares are owned by institutional investors. 7.7% of Resolute Energy Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Penn West Petroleum and Resolute Energy Corporation’s gross revenue, earnings per share 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) -1.35
Resolute Energy Corporation $210.70 million 3.14 $36.32 million ($4.90) -6.13

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.

Analyst Recommendations

This is a breakdown of recent ratings for Penn West Petroleum and Resolute Energy Corporation, as reported by MarketBeat.

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 target price of $2.46, indicating a potential upside of 114.13%. Resolute Energy Corporation has a consensus target price of $43.55, indicating a potential upside of 45.01%. Given Penn West Petroleum’s higher probable upside, analysts clearly believe Penn West Petroleum is more favorable than Resolute Energy Corporation.

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%

Volatility & Risk

Penn West Petroleum has a beta of 4.68, indicating that its share price is 368% more volatile than the S&P 500. Comparatively, Resolute Energy Corporation has a beta of 3.4, indicating that its share price is 240% more volatile than the S&P 500.

Summary

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

About Penn West Petroleum

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.

About Resolute Energy Corporation

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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