Legacy Reserves (LGCY) versus Anadarko Petroleum (APC) Financial Analysis
Legacy Reserves (NASDAQ: LGCY) and Anadarko Petroleum (NYSE:APC) are both energy companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, risk, valuation, analyst recommendations, institutional ownership and dividends.
Institutional and Insider Ownership
20.2% of Legacy Reserves shares are owned by institutional investors. Comparatively, 87.8% of Anadarko Petroleum shares are owned by institutional investors. 26.7% of Legacy Reserves shares are owned by insiders. Comparatively, 0.5% of Anadarko Petroleum shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
This is a summary of current recommendations for Legacy Reserves and Anadarko Petroleum, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Legacy Reserves presently has a consensus price target of $1.88, suggesting a potential downside of 9.46%. Anadarko Petroleum has a consensus price target of $64.75, suggesting a potential upside of 11.08%. Given Anadarko Petroleum’s stronger consensus rating and higher possible upside, analysts clearly believe Anadarko Petroleum is more favorable than Legacy Reserves.
Anadarko Petroleum pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. Legacy Reserves does not pay a dividend. Anadarko Petroleum pays out -5.6% of its earnings in the form of a dividend.
This table compares Legacy Reserves and Anadarko Petroleum’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Earnings and Valuation
This table compares Legacy Reserves and Anadarko Petroleum’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Legacy Reserves||$314.36 million||0.48||-$55.82 million||($2.13)||-0.98|
|Anadarko Petroleum||$7.87 billion||4.05||-$3.07 billion||($3.54)||-16.47|
Legacy Reserves has higher earnings, but lower revenue than Anadarko Petroleum. Anadarko Petroleum is trading at a lower price-to-earnings ratio than Legacy Reserves, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Legacy Reserves has a beta of 2.47, meaning that its stock price is 147% more volatile than the S&P 500. Comparatively, Anadarko Petroleum has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500.
Anadarko Petroleum beats Legacy Reserves on 10 of the 16 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 Anadarko Petroleum
Anadarko Petroleum Corporation (Anadarko) is an independent exploration and production company. The Company is engaged in developing, acquiring, and exploring for oil and natural-gas resources. The Company’s segments include Oil and Gas Exploration and Production; Midstream, and Marketing. The Company’s geographical segments include the United States and International. The Oil and Gas Exploration and Production segment explores for and produces oil, condensate, natural gas and natural gas liquids (NGLs), and focuses on the development and operation of the Company’s liquefied natural gas (LNG) project in Mozambique. The Midstream segment engages in gathering, processing, treating and transporting Anadarko and third-party oil, natural-gas and NGLs production. The Marketing segment sells Anadarko’s oil, natural-gas and NGLs production, as well as third-party purchased volumes. As of December 31, 2016, the Company had approximately 1.7 billion barrels of oil equivalent (BOE).
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