SandRidge Energy (NYSE:SD) & Legacy Reserves (NYSE:LGCY) Critical Review

SandRidge Energy (NYSE:SD) and Legacy Reserves (NASDAQ:LGCY) are both small-cap oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, profitability, risk, dividends, earnings and analyst recommendations.

Valuation and Earnings

This table compares SandRidge Energy and Legacy Reserves’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SandRidge Energy $349.39 million 0.50 -$9.07 million N/A N/A
Legacy Reserves $554.86 million 0.00 $43.83 million $0.18 0.08

Legacy Reserves has higher revenue and earnings than SandRidge Energy.

Profitability

This table compares SandRidge Energy and Legacy Reserves’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SandRidge Energy 14.28% 0.85% 0.68%
Legacy Reserves -18.46% -4.82% -5.33%

Institutional & Insider Ownership

64.8% of SandRidge Energy shares are held by institutional investors. Comparatively, 42.8% of Legacy Reserves shares are held by institutional investors. 3.6% of SandRidge Energy shares are held by company insiders. Comparatively, 0.8% of Legacy Reserves shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

SandRidge Energy has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500. Comparatively, Legacy Reserves has a beta of 2.14, suggesting that its share price is 114% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for SandRidge Energy and Legacy Reserves, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SandRidge Energy 0 0 0 0 N/A
Legacy Reserves 0 1 0 0 2.00

Summary

SandRidge Energy beats Legacy Reserves on 7 of the 10 factors compared between the two stocks.

SandRidge Energy Company Profile

SandRidge Energy, Inc. engages in the exploration, development, and production of oil, natural gas, and natural gas liquids primarily in the Mid-Continent and North Park Basin of the United States. As of December 31, 2018, it had 1,095.8 net producing wells; approximately 571,000 net acres under lease; and 2 rigs drilling in the Mid-Continent and 1 rig drilling in the North Park Basin, as well as total estimated proved reserves of 160.2 million barrels of oil equivalent. The company is headquartered in Oklahoma City, Oklahoma. On May 16, 2016, SandRidge Energy, Inc. and its direct and indirect subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.

Legacy Reserves Company Profile

Legacy Reserves Inc., an independent energy company, engages in the acquisition, development, and production of oil and natural gas properties in the United States. It focuses on the horizontal development of unconventional plays in the Permian Basin and the management of shallow-decline oil and natural gas wells in the regions of Permian Basin, East Texas, Rocky Mountain, and Mid-Continent. As of December 31, 2018, the company had proved reserves of approximately 164.9 million barrels of crude oil equivalent covering natural gas, as well as oil and natural gas liquids. Legacy Reserves Inc. was founded in 2005 and is based in Midland, Texas.

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