Analyzing Cenovus Energy (CVE) & Concho Resources (CXO)

Cenovus Energy (NYSE:CVE) and Concho Resources (NYSE:CXO) are both large-cap oils/energy companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, dividends, valuation, institutional ownership, profitability, risk and analyst recommendations.

Insider and Institutional Ownership

77.9% of Cenovus Energy shares are owned by institutional investors. Comparatively, 94.7% of Concho Resources shares are owned by institutional investors. 1.1% of Concho Resources shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Cenovus Energy and Concho Resources’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cenovus Energy $16.08 billion 0.69 -$2.06 billion ($1.74) -5.16
Concho Resources $4.15 billion 5.36 $2.29 billion $4.59 24.17

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

Dividends

Cenovus Energy pays an annual dividend of $0.15 per share and has a dividend yield of 1.7%. Concho Resources pays an annual dividend of $0.50 per share and has a dividend yield of 0.5%. Cenovus Energy pays out -8.6% of its earnings in the form of a dividend. Concho Resources pays out 10.9% 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. Cenovus Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent recommendations and price targets for Cenovus Energy and Concho Resources, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cenovus Energy 0 8 7 0 2.47
Concho Resources 0 2 23 1 2.96

Cenovus Energy presently has a consensus target price of $14.00, suggesting a potential upside of 56.08%. Concho Resources has a consensus target price of $164.71, suggesting a potential upside of 48.49%. Given Cenovus Energy’s higher probable upside, research analysts plainly believe Cenovus Energy is more favorable than Concho Resources.

Profitability

This table compares Cenovus Energy and Concho Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cenovus Energy -8.68% -11.69% -5.60%
Concho Resources 17.55% 4.92% 3.40%

Volatility and Risk

Cenovus Energy has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, Concho Resources has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Summary

Concho Resources beats Cenovus Energy on 13 of the 17 factors compared between the two stocks.

Cenovus Energy Company Profile

Cenovus Energy Inc., together with its subsidiaries, develops, produces, and markets crude oil, natural gas liquids, and natural gas in Canada and the United States. The company's Oil Sands segment develops and produces bitumen in northeast Alberta. This segment's bitumen assets include Foster Creek, Christina Lake, and Narrows Lake, as well as other projects in the early stages of development, such as Telephone Lake. This segment also holds the Athabasca natural gas assets. Its Deep Basin segment holds assets primarily located in Elmworth-Wapiti, Kaybob-Edson, and Clearwater operating areas of British Columbia and Alberta, and include interests in natural gas processing facilities. The company's Refining and Marketing segment transports, sells, and refines crude oil into petroleum and chemical products. This segment owns a 50% interest ownership in two refineries in the United States; owns and operates a crude-by-rail terminal in Alberta; and markets third-party purchases and sales of product. Cenovus Energy Inc. is headquartered in Calgary, Canada.

Concho Resources Company Profile

Concho Resources Inc., an independent oil and natural gas company, engages in the acquisition, development, and exploration of oil and natural gas properties in the United States. The company's principal operating areas are located in the Permian Basin of southeast New Mexico and west Texas. As of December 31, 2018, its estimated proved reserves totaled 1.2 billion barrels of oil equivalent. The company was founded in 2006 and is headquartered in Midland, Texas.

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