Financial Comparison: EP Energy (EPE) versus Laredo Petroleum (LPI)

EP Energy (NYSE: EPE) and Laredo Petroleum (NYSE:LPI) are both energy companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, profitability, risk and institutional ownership.

Valuation & Earnings

This table compares EP Energy and Laredo Petroleum’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
EP Energy $767.00 million 0.70 -$27.00 million ($1.07) -1.95
Laredo Petroleum $597.38 million 4.30 -$260.73 million $0.50 21.16

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

Volatility & Risk

EP Energy has a beta of 4.44, suggesting that its share price is 344% more volatile than the S&P 500. Comparatively, Laredo Petroleum has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500.

Insider and Institutional Ownership

68.9% of EP Energy shares are held by institutional investors. 1.3% of EP Energy shares are held by insiders. Comparatively, 1.4% of Laredo Petroleum shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
EP Energy -25.44% -8.50% -0.97%
Laredo Petroleum 15.92% 43.77% 6.35%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for EP Energy and Laredo Petroleum, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EP Energy 7 5 1 0 1.54
Laredo Petroleum 2 8 8 0 2.33

EP Energy currently has a consensus target price of $3.30, indicating a potential upside of 57.89%. Laredo Petroleum has a consensus target price of $13.75, indicating a potential upside of 29.96%. Given EP Energy’s higher probable upside, equities analysts plainly believe EP Energy is more favorable than Laredo Petroleum.

Summary

Laredo Petroleum beats EP Energy on 9 of the 14 factors compared between the two stocks.

EP Energy Company Profile

EP Energy Corporation (EP Energy) is an independent exploration and production company. The Company is engaged in the acquisition and development of unconventional onshore oil and natural gas properties in the United States. The Company operates through a base of producing assets. It is involved in the development of its drilling inventory located in three areas: the Eagle Ford Shale (South Texas), the Wolfcamp Shale (Permian Basin in West Texas) and the Altamont Field in the Uinta Basin (Northeastern Utah). As of December 31, 2016, in its operating areas, the Company had identified 5,156 drilling locations (including 639 drilling locations to which it has attributed proved undeveloped reserves). As of December 31, 2016, the Company had proved reserves of 432.4 million barrels of oil equivalent (MMBoe) and an average net daily production of 87,641 barrel of oil equivalent per day (Boe/d).

Laredo Petroleum Company Profile

Laredo Petroleum, Inc. (Laredo) is an independent energy company. The Company is focused on the acquisition, exploration and development of oil and natural gas properties, and the transportation of oil and natural gas from such properties primarily in the Permian Basin in West Texas. It operates through two segments: Exploration and production of oil and natural gas properties, and Midstream and marketing. The exploration and production of oil and natural gas properties are conducted by it through the exploration and development of its acreage in the Permian Basin. As of December 31, 2016, it had assembled 127,847 net acres in the Permian Basin and had total proved reserves, presented on a three-stream basis, of 167,100 thousand of barrels of oil equivalent (MBOE). The Midstream and marketing segment’s operations are conducted by its subsidiary, Laredo Midstream Services, LLC, which buys, sells, gathers and transports oil, natural gas and water primarily for the account of Laredo.

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