Analyzing ConocoPhillips (NYSE:COP) & Vaalco Energy (NYSE:EGY)

Vaalco Energy (NYSE:EGY) and ConocoPhillips (NYSE:COP) are both energy companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, valuation and earnings.

Dividends

Vaalco Energy pays an annual dividend of $0.25 per share and has a dividend yield of 4.6%. ConocoPhillips pays an annual dividend of $3.72 per share and has a dividend yield of 2.7%. Vaalco Energy pays out -17.2% of its earnings in the form of a dividend. ConocoPhillips pays out 39.1% 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. Vaalco Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations for Vaalco Energy and ConocoPhillips, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vaalco Energy	0	2	0	0	2.00
ConocoPhillips	1	10	16	2	2.66

Vaalco Energy presently has a consensus price target of $7.30, indicating a potential upside of 34.56%. ConocoPhillips has a consensus price target of $144.69, indicating a potential upside of 5.04%. Given Vaalco Energy’s higher possible upside, analysts clearly believe Vaalco Energy is more favorable than ConocoPhillips.

Profitability

This table compares Vaalco Energy and ConocoPhillips’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vaalco Energy	-34.37%	-15.97%	-6.25%
ConocoPhillips	16.55%	17.60%	9.26%

Insider and Institutional Ownership

50.3% of Vaalco Energy shares are owned by institutional investors. Comparatively, 82.4% of ConocoPhillips shares are owned by institutional investors. 3.0% of Vaalco Energy shares are owned by company insiders. Comparatively, 0.1% of ConocoPhillips shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Vaalco Energy has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, ConocoPhillips has a beta of 0.16, meaning that its share price is 84% less volatile than the S&P 500.

Valuation & Earnings

This table compares Vaalco Energy and ConocoPhillips”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vaalco Energy	$359.27 million	1.59	-$41.39 million	($1.45)	-3.74
ConocoPhillips	$67.75 billion	2.40	$7.99 billion	$9.52	14.47

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

Summary

ConocoPhillips beats Vaalco Energy on 11 of the 16 factors compared between the two stocks.

About Vaalco Energy

VAALCO Energy, Inc. is an independent energy company engaged in the acquisition, exploration, development and production of crude oil and natural gas. Its activities include operating and investing in producing fields as well as evaluating opportunities to expand its resource base. The company’s operations and interests are focused on Africa, including offshore assets in Gabon and exploration and production activities in Egypt. VAALCO has also held interests in other African countries, including Côte d’Ivoire and Equatorial Guinea.

About ConocoPhillips

ConocoPhillips is an independent exploration and production company focused on finding, developing and producing oil and natural gas. Its products include crude oil, natural gas, liquefied natural gas and natural gas liquids. The company operates in several regions, including North America, Europe, the Middle East, North Africa and the Asia-Pacific. Its activities span exploration, development and production, with a portfolio that includes both conventional and unconventional resources. ConocoPhillips was formed in 2002 through the merger of Conoco and Phillips Petroleum.