Financial Analysis: Chesapeake Granite Wash Trust (NYSE:CHKR) vs. Kosmos Energy (KOS)

Kosmos Energy (NYSE: KOS) and Chesapeake Granite Wash Trust (NYSE:CHKR) are both oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Profitability

This table compares Kosmos Energy and Chesapeake Granite Wash Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kosmos Energy -23.83% -8.88% -2.98%
Chesapeake Granite Wash Trust 84.71% 43.81% 43.81%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Kosmos Energy and Chesapeake Granite Wash Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kosmos Energy 0 5 9 0 2.64
Chesapeake Granite Wash Trust 0 0 0 0 N/A

Kosmos Energy presently has a consensus target price of $9.36, indicating a potential upside of 63.99%. Given Kosmos Energy’s higher possible upside, equities analysts clearly believe Kosmos Energy is more favorable than Chesapeake Granite Wash Trust.

Risk and Volatility

Kosmos Energy has a beta of 1.56, indicating that its stock price is 56% more volatile than the S&P 500. Comparatively, Chesapeake Granite Wash Trust has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500.

Institutional and Insider Ownership

0.8% of Chesapeake Granite Wash Trust shares are owned by institutional investors. 3.8% of Kosmos Energy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Chesapeake Granite Wash Trust pays an annual dividend of $0.26 per share and has a dividend yield of 13.7%. Kosmos Energy does not pay a dividend. Chesapeake Granite Wash Trust pays out 92.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Kosmos Energy and Chesapeake Granite Wash Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kosmos Energy $385.36 million 5.77 -$283.78 million ($0.40) -14.27
Chesapeake Granite Wash Trust $12.43 million 7.15 $12.48 million $0.28 6.79

Chesapeake Granite Wash Trust has lower revenue, but higher earnings than Kosmos Energy. Kosmos Energy is trading at a lower price-to-earnings ratio than Chesapeake Granite Wash Trust, indicating that it is currently the more affordable of the two stocks.

Summary

Chesapeake Granite Wash Trust beats Kosmos Energy on 8 of the 14 factors compared between the two stocks.

About Kosmos Energy

Kosmos Energy Ltd. (Kosmos) is an independent oil and gas exploration and production company. The Company is focused on the emerging areas along the Atlantic Margins. Its assets include existing production and development projects offshore Ghana, discoveries and further exploration potential offshore Mauritania and Senegal, as well as exploration licenses with hydrocarbon potential offshore Sao Tome and Principe, Suriname, Morocco and Western Sahara. The Company has operations in Africa and South America. The West Cape Three Points (WCTP) Block and Deepwater Tano (DT) Block are located within the Tano Basin, offshore Ghana. The Tano Basin represents the eastern extension of the Deep Ivorian Basin, which resulted from the development of an extensional sedimentary basin caused by tensional forces associated with opening of the Atlantic Ocean, as South America separated from Africa in the Mid-Cretaceous period.

About Chesapeake Granite Wash Trust

Chesapeake Granite Wash Trust (the Trust) is a trust formed to own royalty interests for the benefit of Trust unit holders. The royalty interests held by the Trust (Royalty Interests) are derived from Chesapeake Energy Corporation’s (Chesapeake) interests in specified oil and natural gas properties located in the Colony Granite Wash play in Washita County. Chesapeake conveyed the Royalty Interests to the Trust from its interests in approximately 70 existing horizontal wells (Producing Wells) and Chesapeake’s interests in over 120 horizontal development wells (Development Wells) to be drilled on properties within the Area of Mutual Interest (AMI). The AMI lies within Washita County in western Oklahoma and is limited to Colony Granite Wash formation, where Chesapeake holds approximately 40,500 gross acres. Chesapeake has drilled and completed over 90 wells within the AMI. The Colony Granite Wash is located at the eastern end of Des Moines-age granite wash fields.

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