Head to Head Analysis: Sanchez Energy Corporation (SN) versus Laredo Petroleum (LPI)

Sanchez Energy Corporation (NYSE: SN) and Laredo Petroleum (NYSE:LPI) are both oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Insider and Institutional Ownership

69.8% of Sanchez Energy Corporation shares are held by institutional investors. 14.7% of Sanchez Energy Corporation shares are held by insiders. Comparatively, 1.4% of Laredo Petroleum shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Sanchez Energy Corporation and Laredo Petroleum’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sanchez Energy Corporation 7.65% N/A -3.28%
Laredo Petroleum 16.73% 49.15% 6.36%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Sanchez Energy Corporation and Laredo Petroleum, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sanchez Energy Corporation 1 7 6 0 2.36
Laredo Petroleum 2 8 8 0 2.33

Sanchez Energy Corporation currently has a consensus target price of $10.92, indicating a potential upside of 152.12%. Laredo Petroleum has a consensus target price of $14.73, indicating a potential upside of 23.59%. Given Sanchez Energy Corporation’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Sanchez Energy Corporation is more favorable than Laredo Petroleum.

Risk & Volatility

Sanchez Energy Corporation has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Laredo Petroleum has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sanchez Energy Corporation $550.09 million 0.60 $297.41 million ($0.33) -13.12
Laredo Petroleum $720.06 million 4.01 $195.80 million $0.49 24.33

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

Summary

Laredo Petroleum beats Sanchez Energy Corporation on 7 of the 13 factors compared between the two stocks.

Sanchez Energy Corporation Company Profile

Sanchez Energy Corporation is an independent exploration and production company. The Company is focused on the acquisition and development of the United States onshore unconventional oil and natural gas resources. The Company primarily focuses on the Eagle Ford Shale in South Texas. The Company also holds an undeveloped acreage position in the Tuscaloosa Marine Shale (TMS) in Mississippi and Louisiana. As of December 31, 2016, it had assembled approximately 278,000 net leasehold acres in the Eagle Ford Shale. As of December 31, 2016, it had 473 net wells in the Eagle Ford Shale area. In its Catarina area, the Company had approximately 106,000 net acres in Dimmit, LaSalle and Webb Counties, Texas, at December 31, 2016. In its Maverick area, it had approximately 100,000 net acres in Dimmit, Frio, LaSalle, Zavala and McMullen Counties, Texas, at December 31, 2016. In its Javelina area, it had approximately 39,500 net acres in LaSalle and Webb Counties, Texas, at December 31, 2016.

Laredo Petroleum Company Profile

Laredo Petroleum, Inc. (Laredo) is an independent energy company. The Company is focused on the acquisition, exploration and development of oil and natural gas properties, and the transportation of oil and natural gas from such properties primarily in the Permian Basin in West Texas. It operates through two segments: Exploration and production of oil and natural gas properties, and Midstream and marketing. The exploration and production of oil and natural gas properties are conducted by it through the exploration and development of its acreage in the Permian Basin. As of December 31, 2016, it had assembled 127,847 net acres in the Permian Basin and had total proved reserves, presented on a three-stream basis, of 167,100 thousand of barrels of oil equivalent (MBOE). The Midstream and marketing segment’s operations are conducted by its subsidiary, Laredo Midstream Services, LLC, which buys, sells, gathers and transports oil, natural gas and water primarily for the account of Laredo.

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