Critical Review: VAALCO Energy (NYSE:EGY) versus GeoPark (NYSE:GPRK)

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

Valuation & Earnings

This table compares VAALCO Energy and GeoPark”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
VAALCO Energy	$489.61 million	1.33	$60.35 million	$0.60	10.53
GeoPark	$749.47 million	0.62	$111.07 million	$2.04	4.14

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

Institutional and Insider Ownership

50.3% of VAALCO Energy shares are held by institutional investors. Comparatively, 68.2% of GeoPark shares are held by institutional investors. 1.3% of VAALCO Energy shares are held by company insiders. Comparatively, 1.5% of GeoPark 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 breakdown of current recommendations and price targets for VAALCO Energy and GeoPark, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
VAALCO Energy	0	0	1	0	3.00
GeoPark	0	0	2	0	3.00

VAALCO Energy currently has a consensus price target of $8.00, suggesting a potential upside of 26.68%. GeoPark has a consensus price target of $13.00, suggesting a potential upside of 53.85%. Given GeoPark’s higher probable upside, analysts clearly believe GeoPark is more favorable than VAALCO Energy.

Dividends

VAALCO Energy pays an annual dividend of $0.25 per share and has a dividend yield of 4.0%. GeoPark pays an annual dividend of $0.58 per share and has a dividend yield of 6.9%. VAALCO Energy pays out 41.7% of its earnings in the form of a dividend. GeoPark pays out 28.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. GeoPark is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
VAALCO Energy	17.82%	16.00%	8.95%
GeoPark	14.28%	60.77%	10.72%

Risk and Volatility

VAALCO Energy has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500. Comparatively, GeoPark has a beta of 1.32, suggesting that its stock price is 32% more volatile than the S&P 500.

Summary

GeoPark beats VAALCO Energy on 12 of the 15 factors compared between the two stocks.

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.

About GeoPark

GeoPark Limited engages in the exploration, development, and production of oil and gas reserves in Chile, Colombia, Brazil, Argentina, and Ecuador. GeoPark Limited has a strategic partnership with ONGC Videsh to jointly acquire, invest in, and create value from upstream oil and gas projects across Latin America. The company was formerly known as GeoPark Holdings Limited and changed its name to GeoPark Limited in July 2013. GeoPark Limited was founded in 2002 and is based in Bogotá, Colombia.