Financial Review: InterOil (NYSE:IOC) & Centennial Res (CDEV)

InterOil (NYSE: IOC) and Centennial Res (NASDAQ:CDEV) are both energy companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, dividends, valuation, institutional ownership and earnings.

Profitability

This table compares InterOil and Centennial Res’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
InterOil -233.48% -14.08% -8.85%
Centennial Res N/A -10.69% -9.44%

Volatility and Risk

InterOil has a beta of 1.67, indicating that its stock price is 67% more volatile than the S&P 500. Comparatively, Centennial Res has a beta of 2.14, indicating that its stock price is 114% more volatile than the S&P 500.

Valuation and Earnings

This table compares InterOil and Centennial Res’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
InterOil N/A N/A N/A ($3.70) -13.07
Centennial Res $235.87 million 14.69 $121.11 million N/A N/A

Centennial Res has higher revenue and earnings than InterOil.

Institutional and Insider Ownership

46.6% of InterOil shares are held by institutional investors. 44.7% of Centennial Res shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and price targets for InterOil and Centennial Res, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
InterOil 0 1 0 0 2.00
Centennial Res 0 1 10 0 2.91

InterOil currently has a consensus target price of $52.00, suggesting a potential upside of 7.53%. Centennial Res has a consensus target price of $22.50, suggesting a potential upside of 34.49%. Given Centennial Res’ stronger consensus rating and higher probable upside, analysts clearly believe Centennial Res is more favorable than InterOil.

Summary

Centennial Res beats InterOil on 8 of the 10 factors compared between the two stocks.

InterOil Company Profile

InterOil Corporation (InterOil) is an oil and gas business with a sole focus on Papua New Guinea (PNG). The Company’s segments include Upstream and Corporate. The Upstream segment includes exploration, appraisal and development of hydrocarbon structures in PNG. The Corporate segment provides support to the Company’s other business segments through business development and improvement activities, general services, administration, human resources, executive management, financing and treasury, government affairs and investor relations. InterOil holds interests across over four exploration and approximately two production retention licenses in the Eastern Papuan Basin of Papua New Guinea. Its assets include the Elk, Antelope, Triceratops, Raptor and Bobcat fields in the Gulf Province of Papua New Guinea, and exploration licenses covering approximately 16,000 square kilometers (over four million acres) in Papua New Guinea.

Centennial Res Company Profile

Centennial Resource Development, Inc. is an independent oil and natural gas company. The Company is focused on the development of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin. The Company’s assets are concentrated in the Delaware Basin, a sub-basin of the Permian Basin. Its properties consist of large, contiguous acreage blocks in Reeves, Ward and Pecos counties in West Texas. As of December 31, 2016, the Company held approximately 92% membership interest in Centennial Resource Production, LLC (CRP). As of December 31, 2016, its portfolio included 106 operated producing horizontal wells. The horizontal wells span an area of approximately 45 miles long by 20 miles wide where it had commercial production in five zones: the 3rd Bone Spring Sandstone, Upper Wolfcamp A, Lower Wolfcamp A, Wolfcamp B and Wolfcamp C.

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