Callon Petroleum (CPE) & Apache (APA) Financial Review

Callon Petroleum (NYSE: CPE) and Apache (NYSE:APA) are both oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Profitability

This table compares Callon Petroleum and Apache’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Callon Petroleum 30.20% 4.05% 2.96%
Apache 10.60% -0.70% -0.25%

Institutional and Insider Ownership

94.7% of Apache shares are held by institutional investors. 0.8% of Callon Petroleum shares are held by insiders. Comparatively, 0.5% of Apache shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations for Callon Petroleum and Apache, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Callon Petroleum 0 4 19 0 2.83
Apache 6 9 2 0 1.76

Callon Petroleum currently has a consensus target price of $16.64, indicating a potential upside of 45.61%. Apache has a consensus target price of $45.07, indicating a potential upside of 6.25%. Given Callon Petroleum’s stronger consensus rating and higher possible upside, equities analysts plainly believe Callon Petroleum is more favorable than Apache.

Volatility & Risk

Callon Petroleum has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Apache has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Valuation & Earnings

This table compares Callon Petroleum and Apache’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Callon Petroleum $200.85 million 11.48 -$91.81 million $0.44 25.97
Apache $5.35 billion 3.02 -$1.41 billion $1.73 24.52

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

Dividends

Apache pays an annual dividend of $1.00 per share and has a dividend yield of 2.4%. Callon Petroleum does not pay a dividend. Apache pays out 57.8% of its earnings in the form of a dividend.

Summary

Callon Petroleum beats Apache on 12 of the 16 factors compared between the two stocks.

Callon Petroleum Company Profile

Callon Petroleum Company is an independent oil and natural gas company. The Company is engaged in the exploration, development, acquisition and production of oil and natural gas properties. The Company focuses on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin. The Permian Basin is located in West Texas and southeastern New Mexico and consisted of three primary sub-basins: the Midland Basin, the Delaware Basin, and the Central Basin Platform as of December 31, 2016. The Company’s drilling activity focuses on the horizontal development of various prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. It owns additional immaterial properties in Louisiana. As of December 31, 2016, the Company had owned leaseholds in 39,570 net acres in the Permian Basin, all of which was located in the Midland Basin.

Apache Company Profile

Apache Corporation is an independent energy company. The Company explores for, develops, and produces natural gas, crude oil and natural gas liquids. The Company’s production segments include: the United States, Egypt and the United Kingdom North Sea. It also pursues exploration interests in Suriname. In North America, the Company has three onshore regions: The Permian region, The Midcontinent/Gulf Coast region. The Permian region located in West Texas and New Mexico includes the Permian sub-basins, the Midland Basin, Central Basin Platform/Northwest Shelf and Delaware Basin. The Midcontinent/Gulf Coast region includes the Granite Wash, Tonkawa, Canyon Lime, Marmaton, and Cleveland formations of the West Anadarko Basin, the Woodford-SCOOP and Stack plays located in Central Oklahoma, and the Eagle Ford shale in South East Texas.

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