Critical Review: Denbury Resources (DNR) and Occidental Petroleum Corporation (OXY)

Denbury Resources (NYSE: DNR) and Occidental Petroleum Corporation (NYSE:OXY) are both oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, valuation, analyst recommendations and dividends.

Dividends

Occidental Petroleum Corporation pays an annual dividend of $3.08 per share and has a dividend yield of 4.7%. Denbury Resources does not pay a dividend. Occidental Petroleum Corporation pays out 2,369.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Occidental Petroleum Corporation has raised its dividend for 14 consecutive years.

Institutional & Insider Ownership

86.4% of Denbury Resources shares are held by institutional investors. Comparatively, 80.7% of Occidental Petroleum Corporation shares are held by institutional investors. 1.2% of Denbury Resources shares are held by company insiders. Comparatively, 0.3% of Occidental Petroleum Corporation shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Denbury Resources and Occidental Petroleum Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Denbury Resources $1.04 billion 0.43 $384.51 million ($0.96) -1.21
Occidental Petroleum Corporation $11.45 billion 4.34 $3.67 billion $0.13 499.69

Occidental Petroleum Corporation has higher revenue and earnings than Denbury Resources. Denbury Resources is trading at a lower price-to-earnings ratio than Occidental Petroleum Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Denbury Resources and Occidental Petroleum Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Denbury Resources 2 5 1 0 1.88
Occidental Petroleum Corporation 2 10 6 0 2.22

Denbury Resources currently has a consensus target price of $2.21, indicating a potential upside of 90.89%. Occidental Petroleum Corporation has a consensus target price of $65.73, indicating a potential upside of 1.19%. Given Denbury Resources’ higher probable upside, analysts clearly believe Denbury Resources is more favorable than Occidental Petroleum Corporation.

Profitability

This table compares Denbury Resources and Occidental Petroleum Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Denbury Resources -35.24% -1.94% -0.25%
Occidental Petroleum Corporation 0.91% 0.13% 0.06%

Volatility & Risk

Denbury Resources has a beta of 3.38, meaning that its share price is 238% more volatile than the S&P 500. Comparatively, Occidental Petroleum Corporation has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Summary

Occidental Petroleum Corporation beats Denbury Resources on 11 of the 16 factors compared between the two stocks.

About Denbury Resources

Denbury Resources Inc. is an independent oil and natural gas company. The Company’s operations are focused in two operating areas: the Gulf Coast and Rocky Mountain regions. Its properties with proved and producing reserves in the Gulf Coast region are situated in Mississippi, Texas, Louisiana and Alabama, and in the Rocky Mountain region are situated in Montana, North Dakota and Wyoming. It had an estimated proved oil and natural gas reserves of 254.5 million barrels of oil equivalent (MMBOE) as of December 31, 2016. Its primary Gulf Coast carbon dioxide (CO2) source is Jackson Dome, which is located near Jackson, Mississippi. Its mature group of properties includes the initial CO2 field, Little Creek, and other fields, including Brookhaven, Cranfield, Eucutta, Lockhart Crossing, Mallalieu and Soso fields. Its LaBarge Field is located in southwestern Wyoming. Its Riley Ridge Federal Unit is located in southwestern Wyoming and produces gas from the same LaBarge Field.

About Occidental Petroleum Corporation

Occidental Petroleum Corporation (Occidental) is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. The Company also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities. Occidental’s domestic upstream oil and gas operations are located in New Mexico and Texas. Its international operations are located in Bolivia, Colombia, Oman, Qatar and the United Arab Emirates (UAE).

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