EP Energy (EPE) & Wildhorse Resource Development (WRD) Financial Contrast

Wildhorse Resource Development (NYSE: WRD) and EP Energy (NYSE:EPE) are both small-cap energy companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Profitability

This table compares Wildhorse Resource Development and EP Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Wildhorse Resource Development 8.88% 1.24% 0.68%
EP Energy -25.44% -8.50% -0.97%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Wildhorse Resource Development and EP Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Wildhorse Resource Development 0 1 7 0 2.88
EP Energy 7 5 1 0 1.54

Wildhorse Resource Development currently has a consensus price target of $20.13, suggesting a potential upside of 17.48%. EP Energy has a consensus price target of $3.25, suggesting a potential upside of 73.80%. Given EP Energy’s higher probable upside, analysts clearly believe EP Energy is more favorable than Wildhorse Resource Development.

Earnings and Valuation

This table compares Wildhorse Resource Development and EP Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Wildhorse Resource Development $127.34 million 13.61 -$47.07 million $0.45 38.07
EP Energy $767.00 million 0.62 -$27.00 million ($1.06) -1.76

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

Insider and Institutional Ownership

95.8% of Wildhorse Resource Development shares are held by institutional investors. Comparatively, 68.9% of EP Energy shares are held by institutional investors. 2.6% of Wildhorse Resource Development shares are held by company insiders. Comparatively, 1.3% of EP Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Wildhorse Resource Development beats EP Energy on 10 of the 13 factors compared between the two stocks.

About Wildhorse Resource Development

WildHorse Resource Development Corporation is a holding company. The Company is an independent oil and natural gas company. The Company is focused on the acquisition, exploitation, exploration and development of oil, natural gas and natural gas liquid (NGL) resources in the United States. Its assets are characterized by concentrated acreage positions in Southeast Texas and North Louisiana with multiple producing stratigraphic horizons, or stacked pay zones, and single-well rates of return. In Southeast Texas, it operates in Burleson, Lee and Washington Counties where it primarily targets the Eagle Ford Shale (Eagle Ford Acreage), which is an active shale trends in North America. In North Louisiana, the Company operates in and around the Terryville Complex, where it primarily targets the overpressured Cotton Valley play (North Louisiana Acreage). The Company’s subsidiaries include WildHorse Resources II, LLC (WildHorse) and Esquisto and Acquisition Co.

About EP Energy

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).

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