Diamondback Energy (NASDAQ:FANG) & EOG Resources (NYSE:EOG) Financial Analysis

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

Volatility and Risk

EOG Resources has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, Diamondback Energy has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
EOG Resources	24.49%	19.80%	12.17%
Diamondback Energy	27.32%	9.57%	5.70%

Valuation and Earnings

This table compares EOG Resources and Diamondback Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
EOG Resources	$23.70 billion	2.37	$6.40 billion	$10.04	10.31
Diamondback Energy	$11.07 billion	3.79	$3.34 billion	$14.39	10.17

EOG Resources has higher revenue and earnings than Diamondback Energy. Diamondback 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.

Institutional & Insider Ownership

89.9% of EOG Resources shares are owned by institutional investors. Comparatively, 90.0% of Diamondback Energy shares are owned by institutional investors. 0.1% of EOG Resources shares are owned by insiders. Comparatively, 0.7% of Diamondback Energy shares are owned by 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.

Dividends

EOG Resources pays an annual dividend of $4.08 per share and has a dividend yield of 3.9%. Diamondback Energy pays an annual dividend of $4.00 per share and has a dividend yield of 2.7%. EOG Resources pays out 40.6% of its earnings in the form of a dividend. Diamondback Energy pays out 27.8% 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. EOG Resources has raised its dividend for 8 consecutive years and Diamondback Energy has raised its dividend for 7 consecutive years. EOG Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for EOG Resources and Diamondback Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
EOG Resources	0	17	12	1	2.47
Diamondback Energy	0	1	20	1	3.00

EOG Resources presently has a consensus price target of $138.93, suggesting a potential upside of 34.20%. Diamondback Energy has a consensus price target of $188.76, suggesting a potential upside of 29.02%. Given EOG Resources’ higher probable upside, equities research analysts plainly believe EOG Resources is more favorable than Diamondback Energy.

Summary

Diamondback Energy beats EOG Resources on 9 of the 17 factors compared between the two stocks.

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.

About Diamondback Energy

Diamondback Energy, Inc., an independent oil and natural gas company, acquires, develops, explores, and exploits unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. It focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico. The company also owns and operates midstream infrastructure assets, in the Midland and Delaware Basins of the Permian Basin. Diamondback Energy, Inc. was founded in 2007 and is headquartered in Midland, Texas.