Memorial Production Partners (NASDAQ: MEMP) and Legacy Reserves (NASDAQ:LGCY) 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.
Memorial Production Partners pays an annual dividend of $0.06 per share and has a dividend yield of 48.0%. Legacy Reserves does not pay a dividend. Memorial Production Partners pays out -3.4% of its earnings in the form of a dividend.
Risk & Volatility
Memorial Production Partners has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, Legacy Reserves has a beta of 2.46, meaning that its stock price is 146% more volatile than the S&P 500.
This table compares Memorial Production Partners and Legacy Reserves’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Memorial Production Partners||-395.31%||-496.55%||-58.07%|
This is a breakdown of recent ratings and price targets for Memorial Production Partners and Legacy Reserves, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Memorial Production Partners||3||2||0||0||1.40|
Memorial Production Partners currently has a consensus target price of $1.40, indicating a potential upside of 1,020.00%. Legacy Reserves has a consensus target price of $1.88, indicating a potential upside of 44.87%. Given Memorial Production Partners’ higher possible upside, analysts clearly believe Memorial Production Partners is more favorable than Legacy Reserves.
Valuation and Earnings
This table compares Memorial Production Partners and Legacy Reserves’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Memorial Production Partners||N/A||N/A||N/A||($1.75)||-0.07|
|Legacy Reserves||$367.53 million||0.26||$160.94 million||($1.72)||-0.76|
Legacy Reserves has higher revenue and earnings than Memorial Production Partners. Legacy Reserves is trading at a lower price-to-earnings ratio than Memorial Production Partners, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
5.5% of Memorial Production Partners shares are held by institutional investors. Comparatively, 20.9% of Legacy Reserves shares are held by institutional investors. 1.5% of Memorial Production Partners shares are held by insiders. Comparatively, 10.2% of Legacy Reserves shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Legacy Reserves beats Memorial Production Partners on 9 of the 12 factors compared between the two stocks.
Memorial Production Partners Company Profile
Memorial Production Partners LP (the Partnership) owns, acquires and exploits oil and natural gas properties in North America. The Partnership is owned by its limited partners and general partner. Its general partner is responsible for managing all of the Partnership’s operations and activities. The Partnership operates in the acquisition, exploitation, development and production of oil and natural gas properties segment. Its business activities are conducted through Memorial Production Operating LLC (OLLC) and its wholly owned subsidiaries. Its assets consist primarily of producing oil and natural gas properties, and are located in East Texas/Louisiana, Rockies, Offshore Southern California, Permian Basin and South Texas. Most of its oil and natural gas properties are located in oil and natural gas reservoirs with geologic characteristics and production profiles and capital requirements.
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.
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