SM Energy (NYSE:SM) and CrossAmerica Partners (NYSE:CAPL) Critical Survey

CrossAmerica Partners (NYSE:CAPL) and SM Energy (NYSE:SM) are both energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Earnings & Valuation

This table compares CrossAmerica Partners and SM Energy”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CrossAmerica Partners	$3.66 billion	0.23	$39.11 million	$1.37	16.01
SM Energy	$3.15 billion	2.59	$648.00 million	$5.08	6.76

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

Volatility and Risk

CrossAmerica Partners has a beta of 0.3, indicating that its stock price is 70% less volatile than the S&P 500. Comparatively, SM Energy has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500.

Profitability

This table compares CrossAmerica Partners and SM Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CrossAmerica Partners	1.43%	-37.73%	3.92%
SM Energy	18.20%	17.93%	7.70%

Analyst Recommendations

This is a summary of recent ratings and target prices for CrossAmerica Partners and SM Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CrossAmerica Partners	0	1	0	1	3.00
SM Energy	0	6	10	1	2.71

SM Energy has a consensus target price of $39.38, suggesting a potential upside of 14.71%. Given SM Energy’s higher probable upside, analysts plainly believe SM Energy is more favorable than CrossAmerica Partners.

Insider & Institutional Ownership

24.1% of CrossAmerica Partners shares are owned by institutional investors. Comparatively, 94.6% of SM Energy shares are owned by institutional investors. 52.0% of CrossAmerica Partners shares are owned by insiders. Comparatively, 0.5% of SM Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

CrossAmerica Partners pays an annual dividend of $2.10 per share and has a dividend yield of 9.6%. SM Energy pays an annual dividend of $0.88 per share and has a dividend yield of 2.6%. CrossAmerica Partners pays out 153.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SM Energy pays out 17.3% of its earnings in the form of a dividend. SM Energy has increased its dividend for 4 consecutive years.

Summary

SM Energy beats CrossAmerica Partners on 12 of the 17 factors compared between the two stocks.

About CrossAmerica Partners

CrossAmerica Partners LP engages in the wholesale distribution of motor fuels, operation of convenience stores, and ownership and leasing of real estate used in the retail distribution of motor fuels in the United States. It operates in two segments, Wholesale and Retail. The Wholesale segment engages in the wholesale distribution of motor fuels to lessee dealers, independent dealers, commission agents, and company operated retail sites. The Retail segment is involved in the sale of convenience merchandise items; and retail sale of motor fuels at company operated retail sites and retail sites operated by commission agents. CrossAmerica GP LLC operates as the general partner of the company. The company was formerly known as Lehigh Gas Partners LP and changed its name to CrossAmerica Partners LP in October 2014. The company was founded in 1992 and is based in Allentown, Pennsylvania.

About SM Energy

SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in the state of Texas. It has working interests in oil and gas producing wells in the Midland Basin and South Texas. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado.