Critical Analysis: Occidental Petroleum (OXY) & Matador Resources (MTDR)

Occidental Petroleum (NYSE: OXY) and Matador Resources (NYSE:MTDR) are both mid-cap energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, dividends, earnings and risk.

Dividends

Occidental Petroleum pays an annual dividend of $3.08 per share and has a dividend yield of 4.0%. Matador Resources does not pay a dividend. Occidental Petroleum pays out 433.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Occidental Petroleum has raised its dividend for 15 consecutive years.

Risk & Volatility

Occidental Petroleum has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Matador Resources has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Insider & Institutional Ownership

80.2% of Occidental Petroleum shares are owned by institutional investors. Comparatively, 85.1% of Matador Resources shares are owned by institutional investors. 0.3% of Occidental Petroleum shares are owned by company insiders. Comparatively, 11.9% of Matador Resources shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Occidental Petroleum 4.33% 1.31% 0.65%
Matador Resources 40.30% 5.99% 3.15%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Occidental Petroleum and Matador Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Occidental Petroleum 2 11 5 0 2.17
Matador Resources 0 4 12 0 2.75

Occidental Petroleum presently has a consensus target price of $65.71, suggesting a potential downside of 14.13%. Matador Resources has a consensus target price of $30.40, suggesting a potential downside of 7.18%. Given Matador Resources’ stronger consensus rating and higher probable upside, analysts plainly believe Matador Resources is more favorable than Occidental Petroleum.

Earnings and Valuation

This table compares Occidental Petroleum and Matador Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Occidental Petroleum $10.40 billion 5.63 -$574.00 million $0.71 107.79
Matador Resources $264.42 million 13.43 -$97.42 million $1.96 16.71

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

Summary

Matador Resources beats Occidental Petroleum on 13 of the 17 factors compared between the two stocks.

About Occidental Petroleum

Occidental Petroleum Corporation (Occidental) is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. The Company also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities. Occidental’s domestic upstream oil and gas operations are located in New Mexico and Texas. Its international operations are located in Bolivia, Colombia, Oman, Qatar and the United Arab Emirates (UAE).

About Matador Resources

Matador Resources Company is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. The Company’s segments include exploration and production, and midstream. The Company’s operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, the Company conducts midstream operations primarily, as of February 17, 2017, through its midstream joint venture, San Mateo Midstream, LLC (San Mateo or the Joint Venture).

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