Analyzing Legacy Reserves (LGCY) & Cabot Oil & Gas Corporation (COG)

Legacy Reserves (NASDAQ: LGCY) and Cabot Oil & Gas Corporation (NYSE:COG) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, earnings, risk, profitability, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Legacy Reserves and Cabot Oil & Gas Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Legacy Reserves 1 2 0 0 1.67
Cabot Oil & Gas Corporation 0 8 11 0 2.58

Legacy Reserves presently has a consensus price target of $1.88, indicating a potential upside of 15.54%. Cabot Oil & Gas Corporation has a consensus price target of $29.06, indicating a potential upside of 14.59%. Given Legacy Reserves’ higher possible upside, analysts clearly believe Legacy Reserves is more favorable than Cabot Oil & Gas Corporation.

Dividends

Cabot Oil & Gas Corporation pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. Legacy Reserves does not pay a dividend. Cabot Oil & Gas Corporation pays out -54.1% of its earnings in the form of a dividend.

Insider and Institutional Ownership

20.6% of Legacy Reserves shares are owned by institutional investors. Comparatively, 96.3% of Cabot Oil & Gas Corporation shares are owned by institutional investors. 10.2% of Legacy Reserves shares are owned by company insiders. Comparatively, 1.6% of Cabot Oil & Gas Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Legacy Reserves and Cabot Oil & Gas Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Legacy Reserves -28.19% N/A -1.59%
Cabot Oil & Gas Corporation -10.95% 4.68% 2.39%

Volatility & Risk

Legacy Reserves has a beta of 2.5, suggesting that its share price is 150% more volatile than the S&P 500. Comparatively, Cabot Oil & Gas Corporation has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500.

Valuation and Earnings

This table compares Legacy Reserves and Cabot Oil & Gas Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Legacy Reserves N/A N/A N/A ($1.72) -0.95
Cabot Oil & Gas Corporation $1.59 billion 7.38 $881.72 million ($0.37) -68.54

Cabot Oil & Gas Corporation has higher revenue and earnings than Legacy Reserves. Cabot Oil & Gas Corporation is trading at a lower price-to-earnings ratio than Legacy Reserves, indicating that it is currently the more affordable of the two stocks.

Summary

Cabot Oil & Gas Corporation beats Legacy Reserves on 10 of the 13 factors compared between the two stocks.

Legacy Reserves Company Profile

Legacy Reserves LP (Legacy) is a master limited partnership company. The Company focuses on the acquisition and development of oil and natural gas properties located in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions of the United States. As of December 31, 2016, the Company had proved reserves of approximately 144.8 million barrels of crude oil equivalent (MMBoe), of which 72% were natural gas, 28% were oil and natural gas liquids (NGLs) and 94% were classified as proved developed producing. As of December 31, 2016, the Company owned interests in producing oil and natural gas properties in 627 fields in the Permian Basin, East Texas, Piceance Basin of Colorado, Texas Panhandle, Wyoming, North Dakota, Montana, Oklahoma and various other states, from 10,775 gross productive wells, of which 3,799 were operated and 6,976 were non-operated. The Company’s fields and regions include East Texas, Piceance Basin, Spraberry/War San, Lea, Texas Panhandle and Deep Rock.

Cabot Oil & Gas Corporation Company Profile

Cabot Oil & Gas Corporation is an independent oil and gas company engaged in the development, exploitation and exploration of oil and gas properties. The Company operates in the segment of natural gas and oil development, exploitation, exploration and production, in the continental United States. Its assets are concentrated in areas with known hydrocarbon resources, which are conducive to multi-well, repeatable drilling programs. As of December 31, 2016, its exploration, development and production operations were primarily concentrated in two unconventional plays: the Marcellus Shale in northeast Pennsylvania and the Eagle Ford Shale in south Texas. The Company also has operations in various other unconventional and conventional plays throughout the continental United States. Its Marcellus Shale properties are principally located in Susquehanna County, Pennsylvania. Its properties in the Eagle Ford Shale are principally located in Atascosa, Frio and La Salle Counties, Texas.

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