Critical Survey: VAALCO Energy (NYSE:EGY) and Chesapeake Energy (NASDAQ:EXE)

Chesapeake Energy (NASDAQ:EXE) and VAALCO Energy (NYSE:EGY) are both oils/energy companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.

Dividends

Chesapeake Energy pays an annual dividend of $2.30 per share and has a dividend yield of 2.4%. VAALCO Energy pays an annual dividend of $0.25 per share and has a dividend yield of 5.3%. Chesapeake Energy pays out 142.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. VAALCO Energy pays out 29.4% of its earnings in the form of a dividend. VAALCO Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Chesapeake Energy has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, VAALCO Energy has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500.

Institutional and Insider Ownership

97.9% of Chesapeake Energy shares are owned by institutional investors. Comparatively, 50.3% of VAALCO Energy shares are owned by institutional investors. 0.2% of Chesapeake Energy shares are owned by company insiders. Comparatively, 1.3% of VAALCO Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Chesapeake Energy and VAALCO Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chesapeake Energy	6.07%	2.74%	2.08%
VAALCO Energy	17.93%	15.63%	8.72%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Chesapeake Energy and VAALCO Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chesapeake Energy	0	2	5	1	2.88
VAALCO Energy	0	0	1	0	3.00

Chesapeake Energy presently has a consensus target price of $111.71, indicating a potential upside of 15.47%. VAALCO Energy has a consensus target price of $8.00, indicating a potential upside of 69.31%. Given VAALCO Energy’s stronger consensus rating and higher possible upside, analysts plainly believe VAALCO Energy is more favorable than Chesapeake Energy.

Valuation and Earnings

This table compares Chesapeake Energy and VAALCO Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chesapeake Energy	$4.03 billion	5.55	$2.42 billion	$1.62	59.72
VAALCO Energy	$506.42 million	0.97	$60.35 million	$0.85	5.56

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

Summary

VAALCO Energy beats Chesapeake Energy on 9 of the 17 factors compared between the two stocks.

About Chesapeake Energy

Expand Energy Corporation is an independent natural gas producer principally in the United States. Expand Energy Corporation, formerly known as Chesapeake Energy Corporation, is based in OKLAHOMA CITY.

About VAALCO Energy

VAALCO Energy, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids in Gabon, Egypt, Equatorial Guinea, and Canada. The company holds 58.8% interest in the Etame production sharing contract related to the Etame Marin block covering an area of approximately 46,200 gross acres located offshore in the Republic of Gabon in West Africa. It also owns 100% interest in the Eastern Desert, which contains West Gharib, West Bakr and North West Gharib merged concessions covering as area of approximately 45,067 acres, as well as Western Desert, which contains the South Ghazalat concession covering as area of approximately 7,340 acres located in Egypt. In addition, the company production and working interests in Cardium light oil and Mannville liquids-rich gas assets covering as area of 47,400 gross acres located near the north of Calgary, Alberta; and an undeveloped block offshore Equatorial Guinea, West Africa. VAALCO Energy, Inc. was incorporated in 1985 and is headquartered in Houston, Texas.