Diversified Energy (NYSE:DEC) versus Antero Midstream (NYSE:AM) Financial Review

Antero Midstream (NYSE:AM) and Diversified Energy (NYSE:DEC) are both energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, profitability, analyst recommendations, institutional ownership, earnings, valuation and risk.

Volatility & Risk

Antero Midstream has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, Diversified Energy has a beta of -0.32, meaning that its share price is 132% less volatile than the S&P 500.

Profitability

This table compares Antero Midstream and Diversified Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Antero Midstream	53.45%	33.53%	10.82%
Diversified Energy	N/A	N/A	N/A

Insider & Institutional Ownership

54.0% of Antero Midstream shares are held by institutional investors. Comparatively, 26.5% of Diversified Energy shares are held by institutional investors. 1.1% of Antero Midstream shares are held by insiders. Comparatively, 2.9% of Diversified Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Antero Midstream pays an annual dividend of $0.90 per share and has a dividend yield of 4.4%. Diversified Energy pays an annual dividend of $1.16 per share and has a dividend yield of 8.4%. Antero Midstream pays out 63.4% of its earnings in the form of a dividend. Diversified Energy pays out 41.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Diversified Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Antero Midstream and Diversified Energy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Antero Midstream	$1.19 billion	8.13	$413.16 million	$1.42	14.40
Diversified Energy	$1.83 billion	0.54	$341.11 million	$2.79	4.97

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Antero Midstream and Diversified Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Antero Midstream	1	4	1	1	2.29
Diversified Energy	1	1	6	2	2.90

Antero Midstream presently has a consensus target price of $24.00, indicating a potential upside of 17.37%. Diversified Energy has a consensus target price of $22.00, indicating a potential upside of 58.58%. Given Diversified Energy’s stronger consensus rating and higher probable upside, analysts plainly believe Diversified Energy is more favorable than Antero Midstream.

Summary

Diversified Energy beats Antero Midstream on 9 of the 16 factors compared between the two stocks.

About Antero Midstream

Antero Midstream Corporation owns and operates natural gas gathering, compression and water-handling infrastructure in the Appalachian Basin. Its assets support production in the Marcellus and Utica shale regions of West Virginia and Ohio. The company’s services include gathering and compression of natural gas, as well as water transportation and related infrastructure used in shale development. Antero Midstream’s operations primarily serve Antero Resources, connecting its production areas with downstream pipelines and supporting its water needs.

About Diversified Energy

Diversified Energy Company plc is an independent energy company focused on acquiring, operating and managing established natural gas and oil assets. Its production includes natural gas, natural gas liquids and oil. The company also owns and operates infrastructure used to gather and transport production, including pipelines and compression facilities. Its approach emphasizes maintaining and improving mature wells over their operating lives, as well as managing emissions and eventual well retirement.