CVR Refining (CVRR) and ConocoPhillips (COP) Critical Survey

CVR Refining (NYSE: CVRR) and ConocoPhillips (NYSE:COP) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.

Volatility & Risk

CVR Refining has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, ConocoPhillips has a beta of 1.22, meaning that its stock price is 22% more volatile than the S&P 500.

Earnings & Valuation

This table compares CVR Refining and ConocoPhillips’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CVR Refining $5.66 billion 0.57 $88.80 million $0.60 36.67
ConocoPhillips $32.58 billion 2.37 -$855.00 million $0.60 109.98

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

Analyst Recommendations

This is a summary of current ratings and price targets for CVR Refining and ConocoPhillips, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CVR Refining 1 3 2 0 2.17
ConocoPhillips 0 7 15 0 2.68

CVR Refining presently has a consensus price target of $17.63, suggesting a potential downside of 19.89%. ConocoPhillips has a consensus price target of $66.32, suggesting a potential upside of 0.49%. Given ConocoPhillips’ stronger consensus rating and higher probable upside, analysts plainly believe ConocoPhillips is more favorable than CVR Refining.

Profitability

This table compares CVR Refining and ConocoPhillips’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CVR Refining 2.96% 8.19% 4.59%
ConocoPhillips -1.64% 6.69% 2.76%

Institutional and Insider Ownership

15.3% of CVR Refining shares are held by institutional investors. Comparatively, 70.8% of ConocoPhillips shares are held by institutional investors. 0.9% of ConocoPhillips shares are held by 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.

Dividends

CVR Refining pays an annual dividend of $2.04 per share and has a dividend yield of 9.3%. ConocoPhillips pays an annual dividend of $1.14 per share and has a dividend yield of 1.7%. CVR Refining pays out 340.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ConocoPhillips pays out 190.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

ConocoPhillips beats CVR Refining on 9 of the 15 factors compared between the two stocks.

About CVR Refining

CVR Refining, LP operates as an independent petroleum refiner and marketer of transportation fuels in the United States. The company owns and operates a complex full coking medium-sour crude oil refinery in Coffeyville, Kansas; and a complex crude oil refinery in Wynnewood, Oklahoma. It also controls and operates logistics assets, including approximately 570 miles of owned and leased pipelines; approximately 130 crude oil transports; a network of crude oil gathering tank farms; and approximately 6.4 million barrels of owned and leased crude oil storage capacity, as well as approximately 4.6 million barrels of combined refined products and feedstocks storage capacity. In addition, the company owns 170,000 barrels per day pipeline system that transports crude oil from Broome Station facility to Coffeyville refinery; approximately 1.5 million barrels of crude oil storage capacity, which supports the gathering system and Coffeyville refinery; approximately 0.9 million barrels of crude oil storage capacity at Wynnewood refinery; and approximately 1.5 million barrels of crude oil storage capacity in Cushing, Oklahoma, as well as leases crude oil storage capacity of approximately 2.3 million barrels in Cushing and approximately 0.2 million barrels in Duncan, Oklahoma. CVR Refining GP, LLC operates as the general partner of CVR Refining, LP. The company was founded in 2012 and is based in Sugar Land, Texas. CVR Refining, LP is a subsidiary of CVR Energy, Inc.

About ConocoPhillips

ConocoPhillips explores for, produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG), and natural gas liquids worldwide. Its portfolio includes North American tight oil and oil sands assets in Canada; conventional assets in North America, Europe, Asia, and Australia; various LNG developments; and an inventory of conventional and unconventional exploration prospects. The company was founded in 1917 and is headquartered in Houston, Texas.

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