Eclipse Resources (ECR) and Earthstone Energy (ESTE) Financial Review

Eclipse Resources (NYSE: ECR) and Earthstone Energy (NYSE:ESTE) are both small-cap oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Profitability

This table compares Eclipse Resources and Earthstone Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eclipse Resources -11.46% -3.00% -1.44%
Earthstone Energy -54.69% 4.01% 3.25%

Valuation and Earnings

This table compares Eclipse Resources and Earthstone Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Eclipse Resources $235.03 million 1.93 -$203.80 million ($0.15) -11.53
Earthstone Energy $42.27 million 14.87 -$54.54 million ($2.13) -4.64

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

Risk and Volatility

Eclipse Resources has a beta of 2.76, suggesting that its stock price is 176% more volatile than the S&P 500. Comparatively, Earthstone Energy has a beta of 1.15, suggesting that its stock price is 15% more volatile than the S&P 500.

Institutional & Insider Ownership

92.5% of Eclipse Resources shares are held by institutional investors. Comparatively, 13.8% of Earthstone Energy shares are held by institutional investors. 1.0% of Eclipse Resources shares are held by insiders. Comparatively, 64.5% of Earthstone Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Eclipse Resources and Earthstone Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eclipse Resources 1 4 6 0 2.45
Earthstone Energy 0 0 10 0 3.00

Eclipse Resources presently has a consensus price target of $3.25, suggesting a potential upside of 87.86%. Earthstone Energy has a consensus price target of $14.60, suggesting a potential upside of 47.62%. Given Eclipse Resources’ higher probable upside, research analysts clearly believe Eclipse Resources is more favorable than Earthstone Energy.

Summary

Earthstone Energy beats Eclipse Resources on 7 of the 13 factors compared between the two stocks.

Eclipse Resources Company Profile

Eclipse Resources Corporation is an independent exploration and production company. The Company is engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. The Company is the operator of the Utica Core Area and its Marcellus Project Area. The Ordovician-aged Utica Shale is an unconventional reservoir consisting of organic-rich black shale, with production occurring at vertical depths between 6,000 and 10,000 feet. The Marcellus Shale consists of organic-rich black shale, with production occurring at vertical depths between 5,000 and 8,000 feet. As of December 31, 2016, the Company had commenced drilling 202 gross wells within the Utica Core Area and three gross wells within its Marcellus Area. As of December 31, 2016, it had approximately 92,000 net acres in the Utica Shale in Eastern Ohio within the Utica Core Area. As of December 31, 2016, the Company had assembled an acreage position approximating 199,000 net acres in Eastern Ohio.

Earthstone Energy Company Profile

Earthstone Energy, Inc. is an independent oil and natural gas development and production company. The Company is also engaged in corporate mergers and the acquisition of oil and natural gas properties that have production and future development opportunities. Its operations are all in the upstream segment of the oil and natural gas industry and all its properties are onshore in the United States. The Company’s reserve portfolio primarily consists of assets in the Midland Basin of west Texas, the Eagle Ford trend of south Texas and in the Williston Basin of North Dakota. As of December 31, 2016, the Company held approximately 5,900 net leasehold acres in the Midland Basin, located in Howard, Glasscock, Martin and Midland Counties. As of December 31, 2016, it also has approximately 21,000 net leasehold acres in the Eagle Ford trend of south Texas. In the Williston Basin of North Dakota, it had approximately 5,900 net leasehold acres, as of December 31, 2016.

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