Financial Comparison: Laredo Petroleum (LPI) & Continental Resources (CLR)

Laredo Petroleum (NYSE: LPI) and Continental Resources (NYSE:CLR) are both mid-cap oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.

Profitability

This table compares Laredo Petroleum and Continental Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Laredo Petroleum 16.73% 49.15% 6.36%
Continental Resources -5.99% -2.46% -0.76%

Volatility & Risk

Laredo Petroleum has a beta of 1.44, indicating that its share price is 44% more volatile than the S&P 500. Comparatively, Continental Resources has a beta of 1.39, indicating that its share price is 39% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Laredo Petroleum and Continental Resources, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Laredo Petroleum 2 8 8 0 2.33
Continental Resources 1 4 13 0 2.67

Laredo Petroleum currently has a consensus price target of $14.67, indicating a potential upside of 25.73%. Continental Resources has a consensus price target of $45.79, indicating a potential upside of 33.98%. Given Continental Resources’ stronger consensus rating and higher probable upside, analysts clearly believe Continental Resources is more favorable than Laredo Petroleum.

Insider & Institutional Ownership

23.3% of Continental Resources shares are owned by institutional investors. 1.4% of Laredo Petroleum shares are owned by insiders. Comparatively, 76.9% of Continental Resources shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Laredo Petroleum and Continental Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Laredo Petroleum $720.06 million 3.93 $195.80 million $0.49 23.82
Continental Resources $2.37 billion 5.35 $1.75 billion ($0.40) -85.45

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

Summary

Continental Resources beats Laredo Petroleum on 8 of the 13 factors compared between the two stocks.

About Laredo Petroleum

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.

About Continental Resources

Continental Resources, Inc. is a crude oil and natural gas company with properties in the North, South and East regions of the United States. The North region consists of properties north of Kansas and west of the Mississippi River and includes North Dakota Bakken, Montana Bakken and the Red River units. The South region includes properties south of Nebraska and west of the Mississippi River including various plays in the South Central Oklahoma Oil Province (SCOOP), Sooner Trend Anadarko Canadian Kingfisher (STACK), and Arkoma Woodford areas of Oklahoma. The East region is consists of undeveloped leasehold acreage east of the Mississippi River with no drilling or production operations. As of December 31, 2016, its estimated proved reserves were 1,275 million barrels of oil equivalent (MMBoe), with estimated proved developed reserves of 519 MMBoe. As of December 31, 2016, its average daily production from South region properties was 91,088 barrels of oil equivalent (Boe) per day.

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