Reviewing Noble Energy (NBL) & Callon Petroleum (CPE)

Noble Energy (NYSE: NBL) and Callon Petroleum (NYSE:CPE) are both mid-cap oils/energy companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, profitability, earnings, dividends, institutional ownership, analyst recommendations and risk.

Risk & Volatility

Noble Energy has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Callon Petroleum has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500.

Profitability

This table compares Noble Energy and Callon Petroleum’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Noble Energy -45.85% 1.06% 0.49%
Callon Petroleum 34.61% 4.16% 3.07%

Insider and Institutional Ownership

91.6% of Noble Energy shares are owned by institutional investors. 2.3% of Noble Energy shares are owned by insiders. Comparatively, 0.8% of Callon Petroleum shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Noble Energy and Callon Petroleum, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Noble Energy 0 5 18 0 2.78
Callon Petroleum 0 3 21 0 2.88

Noble Energy currently has a consensus target price of $40.48, indicating a potential upside of 43.03%. Callon Petroleum has a consensus target price of $17.57, indicating a potential upside of 50.00%. Given Callon Petroleum’s stronger consensus rating and higher probable upside, analysts clearly believe Callon Petroleum is more favorable than Noble Energy.

Valuation and Earnings

This table compares Noble Energy and Callon Petroleum’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Noble Energy $3.49 billion 3.94 -$998.00 million ($3.99) -7.09
Callon Petroleum $200.85 million 11.77 -$91.81 million $0.50 23.42

Callon Petroleum has higher revenue, but lower earnings than Noble Energy. Noble Energy is trading at a lower price-to-earnings ratio than Callon Petroleum, indicating that it is currently the more affordable of the two stocks.

Dividends

Noble Energy pays an annual dividend of $0.40 per share and has a dividend yield of 1.4%. Callon Petroleum does not pay a dividend. Noble Energy pays out -10.0% of its earnings in the form of a dividend.

Summary

Callon Petroleum beats Noble Energy on 10 of the 16 factors compared between the two stocks.

Noble Energy Company Profile

Noble Energy, Inc. is an independent energy company. The Company is engaged in crude oil, natural gas and natural gas and natural gas liquids (NGLs) exploration, development, production and acquisition. The Company’s segments include: United States, including the onshore DJ Basin, Permian Basin, Eagle Ford Shale, Marcellus Shale and offshore deepwater Gulf of Mexico, as well as the consolidated accounts of Noble Midstream Partners LP (Noble Midstream Partners); Eastern Mediterranean, including offshore Israel and Cyprus; West Africa, including offshore Equatorial Guinea, Cameroon and Gabon, and Other International and Corporate, including new ventures, such as offshore the Falkland Islands, Suriname and Newfoundland. The Company’s portfolio of assets is diversified through the United States and international projects and production mix among crude oil, natural gas and NGLs. Its business focuses on both the United States unconventional basins and certain global conventional basins.

Callon Petroleum Company Profile

Callon Petroleum Company is an independent oil and natural gas company. The Company is engaged in the exploration, development, acquisition and production of oil and natural gas properties. The Company focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin. The Permian Basin is located in West Texas and southeastern New Mexico and consisted of three primary sub-basins: the Midland Basin, the Delaware Basin, and the Central Basin Platform as of December 31, 2016. The Company’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. It owns additional immaterial properties in Louisiana. As of December 31, 2016, the Company had owned leaseholds in 39,570 net acres in the Permian Basin, all of which was located in the Midland Basin.

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