North Atlantic Drilling (NADL) & Vanguard Natural Resources (VNR) Critical Review

North Atlantic Drilling (NYSE: NADL) and Vanguard Natural Resources (NASDAQ:VNR) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.

Insider & Institutional Ownership

5.7% of North Atlantic Drilling shares are owned by institutional investors. Comparatively, 4.0% of Vanguard Natural Resources shares are owned by institutional investors. 1.3% of Vanguard Natural Resources shares are owned 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.

Analyst Ratings

This is a summary of recent ratings and recommmendations for North Atlantic Drilling and Vanguard Natural Resources, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
North Atlantic Drilling 0 0 0 0 N/A
Vanguard Natural Resources 1 0 0 0 1.00

Valuation & Earnings

This table compares North Atlantic Drilling and Vanguard Natural Resources’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
North Atlantic Drilling $343.90 million 0.08 $157.90 million ($7.96) -0.14
Vanguard Natural Resources N/A N/A N/A ($9.14) -0.02

North Atlantic Drilling has higher revenue and earnings than Vanguard Natural Resources. North Atlantic Drilling is trading at a lower price-to-earnings ratio than Vanguard Natural Resources, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares North Atlantic Drilling and Vanguard Natural Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
North Atlantic Drilling -54.37% -55.80% -6.69%
Vanguard Natural Resources -57.32% N/A -16.70%

Volatility & Risk

North Atlantic Drilling has a beta of 3, suggesting that its stock price is 200% more volatile than the S&P 500. Comparatively, Vanguard Natural Resources has a beta of 1.53, suggesting that its stock price is 53% more volatile than the S&P 500.

Summary

North Atlantic Drilling beats Vanguard Natural Resources on 6 of the 8 factors compared between the two stocks.

North Atlantic Drilling Company Profile

North Atlantic Drilling Ltd. operates as an offshore drilling contractor in the North Atlantic region. The company provides harsh environment offshore drilling services to the oil and gas industry primarily in Norway, the United Kingdom, and the Russian Federation. As of December 31, 2016, it owned seven offshore drilling rigs, including three semi-submersibles, one ultra-deep water drillship, and three jack-up rigs. The company was founded in 2011 and is headquartered in Hamilton, Bermuda. North Atlantic Drilling Ltd. is a subsidiary of Seadrill Limited.

Vanguard Natural Resources Company Profile

Vanguard Natural Resources, Inc is an independent oil and gas company. The Company is focused on the acquisition and development of oil and natural gas properties in the United States. Through its operating subsidiaries, the Company owns properties, and oil and natural gas reserves primarily located in over 10 operating basins: the Green River Basin in Wyoming; the Permian Basin in West Texas and New Mexico; the Gulf Coast Basin in Texas, Louisiana, Mississippi and Alabama; the Anadarko Basin in Oklahoma and North Texas; the Piceance Basin in Colorado; the Big Horn Basin in Wyoming and Montana; the Arkoma Basin in Arkansas and Oklahoma; the Williston Basin in North Dakota and Montana; the Wind River Basin in Wyoming, and the Powder River Basin in Wyoming.

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