Analyzing RSP Permian (RSPP) & Cimarex Energy (XEC)

RSP Permian (NYSE: RSPP) and Cimarex Energy (NYSE:XEC) are both mid-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.

Valuation & Earnings

This table compares RSP Permian and Cimarex Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RSP Permian $353.86 million 16.92 -$24.85 million $0.61 61.89
Cimarex Energy $1.26 billion 8.86 -$408.80 million $3.76 31.09

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

Volatility & Risk

RSP Permian has a beta of 2.15, meaning that its share price is 115% more volatile than the S&P 500. Comparatively, Cimarex Energy has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500.

Profitability

This table compares RSP Permian and Cimarex Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RSP Permian 13.69% 2.32% 1.61%
Cimarex Energy 20.45% 16.11% 8.04%

Analyst Ratings

This is a breakdown of recent ratings and price targets for RSP Permian and Cimarex Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RSP Permian 0 1 21 1 3.00
Cimarex Energy 1 8 16 0 2.60

RSP Permian presently has a consensus target price of $47.05, indicating a potential upside of 24.62%. Cimarex Energy has a consensus target price of $137.30, indicating a potential upside of 17.46%. Given RSP Permian’s stronger consensus rating and higher probable upside, equities analysts plainly believe RSP Permian is more favorable than Cimarex Energy.

Dividends

Cimarex Energy pays an annual dividend of $0.32 per share and has a dividend yield of 0.3%. RSP Permian does not pay a dividend. Cimarex Energy pays out 8.5% of its earnings in the form of a dividend.

Insider & Institutional Ownership

86.2% of RSP Permian shares are held by institutional investors. Comparatively, 92.4% of Cimarex Energy shares are held by institutional investors. 15.0% of RSP Permian shares are held by insiders. Comparatively, 1.7% of Cimarex Energy 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.

Summary

RSP Permian beats Cimarex Energy on 10 of the 17 factors compared between the two stocks.

RSP Permian Company Profile

RSP Permian, Inc. is an independent oil and natural gas company. The Company is engaged in the acquisition, exploration, development and production of unconventional oil and associated liquids-rich natural gas reserves in the Permian Basin of West Texas. The Company’s properties are located on contiguous acreage blocks in the Midland Basin, and the Delaware Basin, both sub-basins of the Permian Basin. The Midland Basin properties are primarily in the adjacent counties of Midland, Martin, Andrews, Ector, Glasscock and Dawson. The Delaware Basin properties are in Loving and Winkler counties. The Company has drilled Lower Spraberry horizontal well and a Middle Spraberry horizontal well in the Permian Basin. In addition, it has also drilled a Wolfcamp B horizontal well in the North Midland Basin.

Cimarex Energy Company Profile

Cimarex Energy Co. is an independent oil and gas exploration and production company. The Company operates in exploration and production (E&P) segment. Its operations are located in Oklahoma, Texas and New Mexico. Its E&P activities take place primarily in two areas: the Permian Basin and the Mid-Continent region. Its Permian Basin region encompasses west Texas and southeast New Mexico. Its Mid-Continent region consists of Oklahoma and the Texas Panhandle. As of fiscal year ended December 31, 2016 (fiscal 2016), its activities in the Mid-Continent were focused in the Woodford shale and the Meramec horizon, both in Oklahoma. During fiscal 2016, production from the Mid-Continent averaged 457 millions of cubic feet equivalent (MMcfe) per day, or 47% of total company production. All of the Company’s oil and gas assets are located in the United States. As of December 31, 2016, 63% of its total proved reserves were located in the Mid-Continent region and 37% were in the Permian Basin.

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