Analyzing Laredo Petroleum (LPI) & RSP Permian (RSPP)

Laredo Petroleum (NYSE: LPI) and RSP Permian (NYSE:RSPP) are both mid-cap energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, earnings, valuation and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Laredo Petroleum 15.92% 43.77% 6.35%
RSP Permian 13.69% 2.32% 1.61%

Insider and Institutional Ownership

86.2% of RSP Permian shares are owned by institutional investors. 1.4% of Laredo Petroleum shares are owned by insiders. Comparatively, 15.0% of RSP Permian shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

Laredo Petroleum has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500. Comparatively, RSP Permian has a beta of 2.15, suggesting that its stock price is 115% more volatile than the S&P 500.

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Laredo Petroleum $597.38 million 4.43 -$260.73 million $0.50 21.84
RSP Permian $353.86 million 18.42 -$24.85 million $0.60 68.50

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Laredo Petroleum and RSP Permian, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Laredo Petroleum 2 8 9 0 2.37
RSP Permian 0 0 19 1 3.05

Laredo Petroleum presently has a consensus target price of $13.89, suggesting a potential upside of 27.22%. RSP Permian has a consensus target price of $46.30, suggesting a potential upside of 12.65%. Given Laredo Petroleum’s higher possible upside, equities research analysts clearly believe Laredo Petroleum is more favorable than RSP Permian.

Summary

RSP Permian beats Laredo Petroleum on 10 of the 15 factors compared between the two stocks.

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.

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.

Receive News & Ratings for Laredo Petroleum Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Laredo Petroleum and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply