Head-To-Head Review: Icahn Enterprises (NASDAQ:IEP) & Diamondback Energy (NASDAQ:FANG)

Icahn Enterprises (NASDAQ:IEP) and Diamondback Energy (NASDAQ:FANG) are both energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, profitability, earnings, dividends, risk and institutional ownership.

Valuation and Earnings

This table compares Icahn Enterprises and Diamondback Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Icahn Enterprises	$9.66 billion	0.38	-$299.00 million	($1.54)	-3.16
Diamondback Energy	$15.03 billion	3.39	$1.66 billion	$7.31	24.92

Diamondback Energy has higher revenue and earnings than Icahn Enterprises. Icahn Enterprises is trading at a lower price-to-earnings ratio than Diamondback Energy, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Icahn Enterprises has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500. Comparatively, Diamondback Energy has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500.

Profitability

This table compares Icahn Enterprises and Diamondback Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Icahn Enterprises	-9.25%	-20.22%	-3.71%
Diamondback Energy	11.03%	11.86%	7.31%

Analyst Ratings

This is a summary of current recommendations and price targets for Icahn Enterprises and Diamondback Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Icahn Enterprises	1	0	0	0	1.00
Diamondback Energy	0	5	23	3	2.94

Diamondback Energy has a consensus target price of $226.68, suggesting a potential upside of 24.41%. Given Diamondback Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Diamondback Energy is more favorable than Icahn Enterprises.

Institutional & Insider Ownership

87.1% of Icahn Enterprises shares are held by institutional investors. Comparatively, 90.0% of Diamondback Energy shares are held by institutional investors. 90.1% of Icahn Enterprises shares are held by company insiders. Comparatively, 0.6% of Diamondback Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Icahn Enterprises pays an annual dividend of $2.00 per share and has a dividend yield of 41.2%. Diamondback Energy pays an annual dividend of $4.40 per share and has a dividend yield of 2.4%. Icahn Enterprises pays out -129.9% of its earnings in the form of a dividend. Diamondback Energy pays out 60.2% 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. Diamondback Energy has raised its dividend for 7 consecutive years. Icahn Enterprises is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Diamondback Energy beats Icahn Enterprises on 14 of the 18 factors compared between the two stocks.

About Icahn Enterprises

Icahn Enterprises L.P. is a diversified holding company that invests in and operates businesses across several industries. Its activities include energy, automotive services, food packaging, real estate and home fashion, alongside its investment operations. The company conducts much of its business through subsidiaries and other controlled entities, including operations serving customers in the United States and international markets. Its roots date to 1987, when it was formed as American Real Estate Partners; it adopted the Icahn Enterprises name in 2007.

About Diamondback Energy

Diamondback Energy is an independent oil and natural gas company focused on the development and production of energy resources in the Permian Basin, primarily in West Texas and southeastern New Mexico. Its operations include exploration, drilling and production. The company produces crude oil, natural gas and natural gas liquids. Its activities are concentrated in the Midland and Delaware Basin regions, where it develops oil and gas properties and related reserves. Founded in 2007 and headquartered in Midland, Texas, Diamondback has expanded its Permian Basin operations over time, including through acquisitions.