Reviewing Eclipse Resources (ECR) and Concho Resources (NYSE:CXO)

Concho Resources (NYSE: CXO) and Eclipse Resources (NYSE:ECR) are both energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, profitability, earnings, dividends and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Concho Resources 24.19% 2.92% 1.87%
Eclipse Resources -11.46% -3.00% -1.44%

Insider and Institutional Ownership

94.9% of Concho Resources shares are owned by institutional investors. Comparatively, 92.5% of Eclipse Resources shares are owned by institutional investors. 1.0% of Concho Resources shares are owned by insiders. Comparatively, 1.1% of Eclipse Resources shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Concho Resources and Eclipse Resources’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Concho Resources $1.63 billion 12.64 -$1.46 billion $3.80 36.57
Eclipse Resources $235.03 million 1.93 -$203.80 million ($0.16) -10.81

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

Volatility and Risk

Concho Resources has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Eclipse Resources has a beta of 2.75, indicating that its stock price is 175% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Concho Resources and Eclipse Resources, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Concho Resources 0 7 12 0 2.63
Eclipse Resources 1 4 6 0 2.45

Concho Resources currently has a consensus target price of $167.89, indicating a potential upside of 20.80%. Eclipse Resources has a consensus target price of $3.25, indicating a potential upside of 87.86%. Given Eclipse Resources’ higher possible upside, analysts clearly believe Eclipse Resources is more favorable than Concho Resources.

Summary

Concho Resources beats Eclipse Resources on 10 of the 14 factors compared between the two stocks.

About Concho Resources

Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. The Company’s four operating areas include the Northern Delaware Basin, the Southern Delaware Basin, the Midland Basin and the New Mexico Shelf. As of December 31, 2016, the Company’s operations were focused in the Permian Basin, which underlies an area of Southeast New Mexico and West Texas approximately 250 miles wide and 300 miles long. The Permian Basin is an oil and natural gas producing region in the United States and is characterized by multiple producing horizons and enhanced recovery potential. As of December 31, 2016, the Company produced approximately 55.1 million barrels of oil equivalent (MMBoe) of oil and natural gas. As of December 31, 2016, all of its 720 MMBoe total estimated proved reserves were located in its core operating areas and consisted of approximately 59.5% oil and 40.5% natural gas.

About Eclipse Resources

Eclipse Resources Corporation is an independent exploration and production company. The Company is engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. The Company is the operator of the Utica Core Area and its Marcellus Project Area. The Ordovician-aged Utica Shale is an unconventional reservoir consisting of organic-rich black shale, with production occurring at vertical depths between 6,000 and 10,000 feet. The Marcellus Shale consists of organic-rich black shale, with production occurring at vertical depths between 5,000 and 8,000 feet. As of December 31, 2016, the Company had commenced drilling 202 gross wells within the Utica Core Area and three gross wells within its Marcellus Area. As of December 31, 2016, it had approximately 92,000 net acres in the Utica Shale in Eastern Ohio within the Utica Core Area. As of December 31, 2016, the Company had assembled an acreage position approximating 199,000 net acres in Eastern Ohio.

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