Critical Comparison: Diversified Energy (NYSE:DEC) and TXNM Energy (NYSE:TXNM)

Diversified Energy (NYSE:DEC) and TXNM Energy (NYSE:TXNM) are both energy companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, profitability, institutional ownership, dividends, earnings, analyst recommendations and valuation.

Earnings & Valuation

This table compares Diversified Energy and TXNM Energy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diversified Energy	$1.83 billion	0.58	$341.11 million	$3.52	4.14
TXNM Energy	$2.17 billion	3.03	$151.89 million	$1.39	42.62

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

Dividends

Diversified Energy pays an annual dividend of $1.16 per share and has a dividend yield of 8.0%. TXNM Energy pays an annual dividend of $1.69 per share and has a dividend yield of 2.9%. Diversified Energy pays out 33.0% of its earnings in the form of a dividend. TXNM Energy pays out 121.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Diversified Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

26.5% of Diversified Energy shares are owned by institutional investors. Comparatively, 91.7% of TXNM Energy shares are owned by institutional investors. 2.9% of Diversified Energy shares are owned by company insiders. Comparatively, 1.1% of TXNM Energy shares are owned by company 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.

Profitability

This table compares Diversified Energy and TXNM Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Diversified Energy	N/A	N/A	N/A
TXNM Energy	6.96%	7.18%	2.05%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Diversified Energy and TXNM Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diversified Energy	0	1	7	1	3.00
TXNM Energy	0	3	0	0	2.00

Diversified Energy currently has a consensus price target of $21.83, suggesting a potential upside of 49.90%. TXNM Energy has a consensus price target of $61.25, suggesting a potential upside of 3.38%. Given Diversified Energy’s stronger consensus rating and higher possible upside, research analysts clearly believe Diversified Energy is more favorable than TXNM Energy.

Volatility & Risk

Diversified Energy has a beta of -0.34, meaning that its stock price is 134% less volatile than the S&P 500. Comparatively, TXNM Energy has a beta of 0.16, meaning that its stock price is 84% less volatile than the S&P 500.

Summary

Diversified Energy beats TXNM Energy on 9 of the 17 factors compared between the two stocks.

About Diversified Energy

Diversified Energy Company PLC operates as an independent owner and operator of producing natural gas and oil wells primarily in the Appalachian Basin of the United States. The company is involved in the production, marketing, and transportation of natural gas, natural gas liquids, crude oil, and condensates. Its assets consist of natural gas wells and gathering systems located in the states of Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania, Oklahoma, Texas, and Louisiana. The company was formerly known as Diversified Gas & Oil PLC and changed its name to Diversified Energy Company PLC in May 2021. Diversified Energy Company PLC was founded in 2001 and is headquartered in Birmingham, Alabama.

About TXNM Energy

TXNM Energy, Inc., through its subsidiaries, provides electricity and electric services in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment engages in the generation, transmission, and distribution of electricity. The segment owns and leases communications, office and other equipment, office space, vehicles, and real estate. It generates electricity using coal, natural gas and oil, and nuclear fuel and waste, as well as solar, wind, geothermal, and battery storage energy sources. The TNMP segment provides regulated transmission and distribution services. The segment also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. The company was formerly known as PNM Resources, Inc and changed its name to TXNM Energy, Inc. in August 2024. TXNM Energy, Inc. was founded in 1882 and is based in Albuquerque, New Mexico.