Critical Survey: RWE (RWEOY) & Matador Resources (MTDR)

RWE (OTCMKTS: RWEOY) and Matador Resources (NYSE:MTDR) are both utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.

Valuation & Earnings

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This table compares RWE and Matador Resources’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RWE $48.24 billion 0.32 -$6.25 billion $1.39 17.87
Matador Resources $544.28 million 5.61 $125.86 million $0.72 38.81

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

Profitability

This table compares RWE and Matador Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RWE -7.68% 13.94% 1.86%
Matador Resources 22.64% 7.11% 3.94%

Institutional & Insider Ownership

0.1% of RWE shares are owned by institutional investors. Comparatively, 87.6% of Matador Resources shares are owned by institutional investors. 11.9% of Matador Resources shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for RWE and Matador Resources, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RWE 1 4 2 0 2.14
Matador Resources 0 4 11 0 2.73

Matador Resources has a consensus price target of $33.60, indicating a potential upside of 20.26%. Given Matador Resources’ stronger consensus rating and higher probable upside, analysts clearly believe Matador Resources is more favorable than RWE.

Risk and Volatility

RWE has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Matador Resources has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Summary

Matador Resources beats RWE on 11 of the 14 factors compared between the two stocks.

RWE Company Profile

RWE Aktiengesellschaft supplies electricity and gas. It operates through four segments: Lignite & Nuclear; European Power; Supply & Trading; and Innogy. The company operates power stations based on lignite, coal, gas, nuclear power, renewable energies, and hydro and biomass; and operates and maintains solar farms, as well as generates heat. It is also involved in the supply and trade of power, gas, coal, freight, oil, weather derivatives, biomass, emissions certificates, and renewable energies; and construction of battery storage facilities. RWE Aktiengesellschaft manages electricity distribution networks; and gas distribution networks. The company offers its products and services to residential and commercial customers, industrial and corporate customers, and distributors in Germany, the Netherlands, Belgium, the United Kingdom, and Eastern Europe. It serves approximately 15.9 million electricity customers and approximately 6.6 million gas customers; and has a power generation capacity of approximately 40,000 megawatts. The company was founded in 1898 and is headquartered in Essen, Germany.

Matador Resources Company Profile

Matador Resources Company, an independent energy company, engages in the exploration, development, production, and acquisition of oil and natural gas resources in the United States. It operates in two segments, Exploration and Production, and Midstream. The company primarily holds interests in the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. It also operates the Eagle Ford shale play in South Texas; and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. In addition, the company conducts midstream operations in support of its exploration, development, and production operations; provides natural gas processing and oil transportation services; and offers oil, natural gas, and salt water gathering, as well as salt water disposal services to third parties. As of December 31, 2017, its estimated total proved oil and natural gas reserves were 152.8 million barrels of oil equivalent, including 86.7 million stock tank barrels of oil and 396.2 billion cubic feet of natural gas. The company was formerly known as Matador Holdco, Inc. and changed its name to Matador Resources Company in August 2011. Matador Resources Company was founded in 2003 and is headquartered in Dallas, Texas.

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