Diamondback Energy (NASDAQ:FANG) versus Murphy Oil (NYSE:MUR) Critical Comparison

Murphy Oil (NYSE:MUR) 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Murphy Oil	10.20%	5.25%	2.88%
Diamondback Energy	27.32%	9.57%	5.70%

Institutional & Insider Ownership

78.3% of Murphy Oil shares are held by institutional investors. Comparatively, 90.0% of Diamondback Energy shares are held by institutional investors. 6.5% of Murphy Oil shares are held by company insiders. Comparatively, 0.5% 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.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Murphy Oil	2	13	0	0	1.87
Diamondback Energy	0	1	20	2	3.04

Murphy Oil presently has a consensus target price of $28.50, suggesting a potential downside of 8.25%. Diamondback Energy has a consensus target price of $188.77, suggesting a potential upside of 28.03%. Given Diamondback Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Diamondback Energy is more favorable than Murphy Oil.

Volatility & Risk

Murphy Oil has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, Diamondback Energy has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500.

Dividends

Murphy Oil pays an annual dividend of $1.30 per share and has a dividend yield of 4.2%. Diamondback Energy pays an annual dividend of $4.00 per share and has a dividend yield of 2.7%. Murphy Oil pays out 132.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Diamondback Energy pays out 27.8% of its earnings in the form of a dividend. Murphy Oil has raised its dividend for 5 consecutive years and Diamondback Energy has raised its dividend for 7 consecutive years.

Valuation & Earnings

This table compares Murphy Oil and Diamondback Energy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Murphy Oil	$2.75 billion	1.61	$407.17 million	$0.98	31.70
Diamondback Energy	$11.07 billion	3.82	$3.34 billion	$14.39	10.25

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

Summary

Diamondback Energy beats Murphy Oil on 14 of the 17 factors compared between the two stocks.

About Murphy Oil

Murphy Oil Corporation, together with its subsidiaries, operates as an oil and gas exploration and production company in the United States, Canada, and internationally. It explores for and produces crude oil, natural gas, and natural gas liquids. The company was formerly known as Murphy Corporation and changed its name to Murphy Oil Corporation in 1964. The company was incorporated in 1950 and is headquartered in Houston, Texas.

About Diamondback Energy

Diamondback Energy, Inc., an independent oil and natural gas company, acquires, develops, explores, and exploits unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. It focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico. The company also owns and operates midstream infrastructure assets, in the Midland and Delaware Basins of the Permian Basin. Diamondback Energy, Inc. was founded in 2007 and is headquartered in Midland, Texas.