Critical Review: Newfield Exploration (NFX) and Noble Energy (NBL)

Newfield Exploration (NYSE: NFX) and Noble Energy (NYSE:NBL) are both mid-cap oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, valuation, analyst recommendations and dividends.

Dividends

Noble Energy pays an annual dividend of $0.40 per share and has a dividend yield of 1.5%. Newfield Exploration does not pay a dividend. Noble Energy pays out -10.0% of its earnings in the form of a dividend.

Institutional & Insider Ownership

99.8% of Newfield Exploration shares are held by institutional investors. Comparatively, 94.3% of Noble Energy shares are held by institutional investors. 0.5% of Newfield Exploration shares are held by company insiders. Comparatively, 2.3% of Noble Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Newfield Exploration and Noble Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Newfield Exploration $1.47 billion 3.99 -$1.23 billion $1.73 16.99
Noble Energy $3.49 billion 3.76 -$998.00 million ($3.99) -6.75

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

Analyst Recommendations

This is a breakdown of recent ratings for Newfield Exploration and Noble Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Newfield Exploration 1 7 16 0 2.63
Noble Energy 0 4 16 0 2.80

Newfield Exploration currently has a consensus target price of $38.95, indicating a potential upside of 32.53%. Noble Energy has a consensus target price of $40.21, indicating a potential upside of 49.26%. Given Noble Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Noble Energy is more favorable than Newfield Exploration.

Profitability

This table compares Newfield Exploration and Noble Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Newfield Exploration 20.62% 35.28% 8.89%
Noble Energy -45.85% 1.06% 0.49%

Volatility & Risk

Newfield Exploration has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500. Comparatively, Noble Energy has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500.

Summary

Noble Energy beats Newfield Exploration on 8 of the 15 factors compared between the two stocks.

About Newfield Exploration

Newfield Exploration Company is an independent exploration and production company. It is engaged in the exploration, development and production of crude oil, natural gas and natural gas liquids. Its operating segments are the United States and China. Its the United States operations are onshore and focus primarily on large scale, liquids resource plays. Its principal areas of operation are the Anadarko and Arkoma basins of Oklahoma, the Williston Basin of North Dakota and the Uinta Basin of Utah. It has oil producing assets offshore China. As of December 31, 2016, its proved reserves of 513 million barrels of oil equivalents (MMBOE) consisted of 304 MMBOE proved developed producing, 10 MMBOE proved developed non-producing and 199 MMBOE proved undeveloped reserves. As of December 31, 2016, its proved liquids reserves were 285 million barrels of crude oil or other liquid hydrocarbons. As of December 31, 2016, 67% of its proved liquids reserves were crude oil or condensate.

About Noble Energy

Noble Energy, Inc. is an independent energy company. The Company is engaged in crude oil, natural gas and natural gas and natural gas liquids (NGLs) exploration, development, production and acquisition. The Company’s segments include: United States, including the onshore DJ Basin, Permian Basin, Eagle Ford Shale, Marcellus Shale and offshore deepwater Gulf of Mexico, as well as the consolidated accounts of Noble Midstream Partners LP (Noble Midstream Partners); Eastern Mediterranean, including offshore Israel and Cyprus; West Africa, including offshore Equatorial Guinea, Cameroon and Gabon, and Other International and Corporate, including new ventures, such as offshore the Falkland Islands, Suriname and Newfoundland. The Company’s portfolio of assets is diversified through the United States and international projects and production mix among crude oil, natural gas and NGLs. Its business focuses on both the United States unconventional basins and certain global conventional basins.

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