Critical Comparison: Parsley Energy (PE) versus Its Peers

Parsley Energy (NYSE: PE) is one of 237 publicly-traded companies in the “Oil & Gas Exploration and Production” industry, but how does it weigh in compared to its peers? We will compare Parsley Energy to similar businesses based on the strength of its valuation, profitability, dividends, analyst recommendations, earnings, risk and institutional ownership.

Volatility & Risk

Parsley Energy has a beta of -0.05, meaning that its stock price is 105% less volatile than the S&P 500. Comparatively, Parsley Energy’s peers have a beta of 1.42, meaning that their average stock price is 42% more volatile than the S&P 500.

Profitability

This table compares Parsley Energy and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Parsley Energy 3.22% 1.87% 1.31%
Parsley Energy Competitors -449.92% 12.12% 4.96%

Analyst Recommendations

This is a summary of current ratings and price targets for Parsley Energy and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Parsley Energy 0 0 22 0 3.00
Parsley Energy Competitors 1458 7607 12277 259 2.52

Parsley Energy presently has a consensus target price of $40.19, indicating a potential upside of 50.13%. As a group, “Oil & Gas Exploration and Production” companies have a potential upside of 35.74%. Given Parsley Energy’s stronger consensus rating and higher probable upside, equities analysts plainly believe Parsley Energy is more favorable than its peers.

Institutional and Insider Ownership

78.5% of Parsley Energy shares are held by institutional investors. Comparatively, 61.7% of shares of all “Oil & Gas Exploration and Production” companies are held by institutional investors. 15.5% of Parsley Energy shares are held by company insiders. Comparatively, 12.2% of shares of all “Oil & Gas Exploration and Production” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Parsley Energy and its peers revenue, earnings per share and valuation.

Gross Revenue NetIncome Price/Earnings Ratio
Parsley Energy $457.77 million -$74.18 million 334.67
Parsley Energy Competitors $1.87 billion -$438.84 million -49.43

Parsley Energy’s peers have higher revenue, but lower earnings than Parsley Energy. Parsley Energy is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Summary

Parsley Energy beats its peers on 8 of the 13 factors compared.

Parsley Energy Company Profile

Parsley Energy, Inc. is a holding company. The Company is an independent oil and natural gas company. The Company focuses on the acquisition, development and exploitation of unconventional oil and natural gas reserves in the Permian Basin. The Permian Basin is located in West Texas and Southeastern New Mexico and includes three primary sub-areas: the Midland Basin, the Central Basin Platform and the Delaware Basin. The Company’s properties are primarily located in the Midland and Delaware Basins, where it focuses on horizontal development drilling and target various stacked pay intervals in the Spraberry, Wolfcamp, Upper Pennsylvanian (Cline) and Atoka shales. As of December 31, 2016, it had an average working interest of 87% in 166 gross (146.7 net) horizontal wells, of which 151 gross (132.4 net) are in the Midland Basin. As of December 31, 2016, the Company operated seven horizontal rigs and three vertical drilling rigs.

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