Legacy Reserves (NASDAQ: LGCY) and W&T Offshore (NYSE:WTI) are both oils/energy companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, institutional ownership, risk and earnings.

Profitability

This table compares Legacy Reserves and W&T Offshore’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Legacy Reserves -28.19% N/A -1.59%
W&T Offshore 25.52% -6.08% 4.60%

Risk & Volatility

Legacy Reserves has a beta of 2.5, meaning that its stock price is 150% more volatile than the S&P 500. Comparatively, W&T Offshore has a beta of 2.51, meaning that its stock price is 151% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Legacy Reserves and W&T Offshore, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Legacy Reserves 1 2 0 0 1.67
W&T Offshore 1 2 0 0 1.67

Legacy Reserves presently has a consensus target price of $1.88, suggesting a potential upside of 21.51%. W&T Offshore has a consensus target price of $2.63, suggesting a potential downside of 19.23%. Given Legacy Reserves’ higher probable upside, equities research analysts plainly believe Legacy Reserves is more favorable than W&T Offshore.

Valuation and Earnings

This table compares Legacy Reserves and W&T Offshore’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Legacy Reserves N/A N/A N/A ($1.72) -0.90
W&T Offshore $468.38 million 0.95 $252.78 million $1.01 3.22

W&T Offshore has higher revenue and earnings than Legacy Reserves. Legacy Reserves is trading at a lower price-to-earnings ratio than W&T Offshore, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

20.6% of Legacy Reserves shares are owned by institutional investors. Comparatively, 49.1% of W&T Offshore shares are owned by institutional investors. 10.2% of Legacy Reserves shares are owned by insiders. Comparatively, 32.6% of W&T Offshore shares are owned by 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.

Summary

W&T Offshore beats Legacy Reserves on 7 of the 9 factors compared between the two stocks.

About Legacy Reserves

Legacy Reserves LP (Legacy) is a master limited partnership company. The Company focuses on the acquisition and development of oil and natural gas properties located in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions of the United States. As of December 31, 2016, the Company had proved reserves of approximately 144.8 million barrels of crude oil equivalent (MMBoe), of which 72% were natural gas, 28% were oil and natural gas liquids (NGLs) and 94% were classified as proved developed producing. As of December 31, 2016, the Company owned interests in producing oil and natural gas properties in 627 fields in the Permian Basin, East Texas, Piceance Basin of Colorado, Texas Panhandle, Wyoming, North Dakota, Montana, Oklahoma and various other states, from 10,775 gross productive wells, of which 3,799 were operated and 6,976 were non-operated. The Company’s fields and regions include East Texas, Piceance Basin, Spraberry/War San, Lea, Texas Panhandle and Deep Rock.

About W&T Offshore

W&T Offshore, Inc. is an independent oil and natural gas producer. The Company is engaged in the exploration, development and acquisition of oil and natural gas properties in the Gulf of Mexico. As of December 31, 2016, the Company had interests in offshore leases covering approximately 750,000 gross acres (450,000 net acres) spanning across the Outer Continental Shelf (OCS) off the coasts of Louisiana, Texas, Mississippi and Alabama. Its producing fields are located in federal and state waters in the Gulf of Mexico in water depths ranging from less than 10 feet up to 7,300 feet. Its fields include Ship Shoal 349 Field (Mahogany), Fairway Field, Viosca Knoll 783 Field (Viosca Knoll 783 (Tahoe) and Viosca Knoll 784 (SE Tahoe)), Mississippi Canyon 782 Field (Dantzler), Mississippi Canyon 698 Field (Big Bend), Mississippi Canyon 243 Field (Matterhorn), Ewing Bank 910, Brazos A-133 Field and Viosca Knoll 823 Field (Virgo).

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