Viper Energy Partners (VNOM) and EP Energy (EPE) Financial Contrast

EP Energy (NYSE: EPE) and Viper Energy Partners (NASDAQ:VNOM) are both oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, institutional ownership and profitability.

Profitability

This table compares EP Energy and Viper Energy Partners’ 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%
Viper Energy Partners 64.80% 13.92% 13.02%

Volatility & Risk

EP Energy has a beta of 3.96, indicating that its stock price is 296% more volatile than the S&P 500. Comparatively, Viper Energy Partners has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for EP Energy and Viper Energy Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
EP Energy 7 5 1 0 1.54
Viper Energy Partners 0 0 11 1 3.08

EP Energy presently has a consensus price target of $3.25, suggesting a potential upside of 81.56%. Viper Energy Partners has a consensus price target of $25.50, suggesting a potential upside of 8.60%. Given EP Energy’s higher probable upside, analysts clearly believe EP Energy is more favorable than Viper Energy Partners.

Insider and Institutional Ownership

68.8% of EP Energy shares are owned by institutional investors. Comparatively, 26.0% of Viper Energy Partners shares are owned by institutional investors. 1.3% of EP Energy shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares EP Energy and Viper Energy Partners’ 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 0.60 -$27.00 million ($1.06) -1.69
Viper Energy Partners $172.03 million 15.54 $111.47 million $1.06 22.15

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

Dividends

Viper Energy Partners pays an annual dividend of $1.35 per share and has a dividend yield of 5.7%. EP Energy does not pay a dividend. Viper Energy Partners pays out 127.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Viper Energy Partners beats EP Energy on 10 of the 16 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).

Viper Energy Partners Company Profile

Viper Energy Partners LP is engaged in owning, acquiring and exploiting oil and natural gas properties in North America. The Company’s assets are located in the Permian Basin of West Texas. As of December 31, 2016, the Permian Basin consisted of approximately 85,000 square miles. As of December 31, 2016, its assets consisted of mineral interests underlying 107,568 gross acres in the Permian Basin. As of December 31, 2016, there were 545 vertical wells and 190 horizontal wells producing on this acreage. As of December 31, 2016, its estimated proved oil and natural gas reserves of its assets was 31,435 thousand barrels of crude oil equivalent (MBOE). As of December 31, 2016, the Company’s proved reserves were approximately 68% oil, 18% natural gas liquids and 14% natural gas. In addition to its mineral interests, the Company owns a minor equity interest in an entity that owns mineral, overriding royalty, net profits, leasehold and other similar interests.

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