Critical Analysis: Parsley Energy (PE) vs. Nexen Energy (NXY)

Parsley Energy (NYSE: PE) and Nexen Energy (NYSE:NXY) are both mid-cap energy companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Insider & Institutional Ownership

78.7% of Parsley Energy shares are held by institutional investors. 15.5% of Parsley Energy shares 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.

Profitability

This table compares Parsley Energy and Nexen Energy’s 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%
Nexen Energy N/A N/A N/A

Analyst Ratings

This is a summary of current ratings and recommmendations for Parsley Energy and Nexen Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Parsley Energy 0 0 22 0 3.00
Nexen Energy 0 0 0 0 N/A

Parsley Energy currently has a consensus target price of $40.05, suggesting a potential upside of 48.49%. Given Parsley Energy’s higher probable upside, research analysts plainly believe Parsley Energy is more favorable than Nexen Energy.

Valuation and Earnings

This table compares Parsley Energy and Nexen Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Parsley Energy $457.77 million 18.52 -$74.18 million $0.07 385.29
Nexen Energy N/A N/A N/A N/A N/A

Nexen Energy has higher revenue, but lower earnings than Parsley Energy.

Summary

Parsley Energy beats Nexen Energy on 8 of the 8 factors compared between the two stocks.

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.

Nexen Energy Company Profile

Nexen Inc. (Nexen) is an independent global energy company. The Company’s conventional oil and gas assets consist of large acreage positions in select basins, including the United Kingdom North Sea, deep-water Gulf of Mexico and offshore West Africa. Nexen operates the Buzzard field and platform in the United Kingdom. In the Gulf of Mexico, the Company holds deep-water and shelf producing assets, as well as several undeveloped deep-water discoveries, including Appomattox, Vicksburg and Knotty Head. The Company is a leaseholder in the Gulf with access to deep-water drilling rigs. The deep-water Gulf of Mexico is near infrastructure and continental United States markets. Nexen’s oil sands investments include interests in the Long Lake project, the Syncrude joint venture and 656,000 undeveloped acres (gross) in the Athabasca oil sands in northern Alberta.

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