Diamondback Energy (NASDAQ:FANG) and Ecopetrol (NYSE:EC) Financial Comparison

Diamondback Energy (NASDAQ:FANG) and Ecopetrol (NYSE:EC) are both large-cap oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.

Profitability

This table compares Diamondback Energy and Ecopetrol’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Diamondback Energy -30.34% 9.49% 5.17%
Ecopetrol 13.23% 7.49% 2.95%

Volatility & Risk

Diamondback Energy has a beta of 2.58, indicating that its stock price is 158% more volatile than the S&P 500. Comparatively, Ecopetrol has a beta of 1.85, indicating that its stock price is 85% more volatile than the S&P 500.

Insider and Institutional Ownership

89.6% of Diamondback Energy shares are held by institutional investors. Comparatively, 1.5% of Ecopetrol shares are held by institutional investors. 0.4% of Diamondback Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Diamondback Energy and Ecopetrol, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Diamondback Energy 0 3 22 0 2.88
Ecopetrol 1 1 2 0 2.25

Diamondback Energy currently has a consensus target price of $103.00, indicating a potential downside of 4.80%. Ecopetrol has a consensus target price of $13.57, indicating a potential downside of 12.70%. Given Diamondback Energy’s stronger consensus rating and higher probable upside, equities analysts clearly believe Diamondback Energy is more favorable than Ecopetrol.

Earnings and Valuation

This table compares Diamondback Energy and Ecopetrol’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Diamondback Energy $2.81 billion 6.96 -$4.52 billion $3.04 35.59
Ecopetrol $13.66 billion 2.34 $2.06 billion $0.28 55.50

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

Dividends

Diamondback Energy pays an annual dividend of $1.80 per share and has a dividend yield of 1.7%. Ecopetrol pays an annual dividend of $0.09 per share and has a dividend yield of 0.6%. Diamondback Energy pays out 59.2% of its earnings in the form of a dividend. Ecopetrol pays out 32.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Diamondback Energy has increased its dividend for 2 consecutive years. Diamondback Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Diamondback Energy beats Ecopetrol on 12 of the 17 factors compared between the two stocks.

About Diamondback Energy

Diamondback Energy, Inc. is an independent oil and natural gas company, which engages in the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves. It operates through the Upstream and Midstream Services segments. The Upstream segment focuses on the Permian Basin operations in West Texas. The Midstream Services segment involves in the Midland and Delaware Basins. The company was founded in December 2007 and is headquartered in Midland, TX.

About Ecopetrol

Ecopetrol SA engages in the exploration, development, and production of crude oil and natural gas. It operates through the following segments: Exploration and Production, Transportation and Logistics, and Refining and Petrochemicals. The Exploration and Production segment deals with oil and gas exploration and production activities. The Transportation and Logistics segment comprises of pipelines and other transportation activities. The Refining and Petrochemicals segment involves in refining activities and its products include motor fuels, fuel oils, and petrochemicals. The company was founded in 1948 and is headquartered in Bogota, Colombia.

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