Analyzing Diversified Energy (NYSE:DEC) and Antero Midstream (NYSE:AM)

Diversified Energy (NYSE:DEC) and Antero Midstream (NYSE:AM) are both energy companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.

Institutional and Insider Ownership

26.5% of Diversified Energy shares are held by institutional investors. Comparatively, 54.0% of Antero Midstream shares are held by institutional investors. 2.9% of Diversified Energy shares are held by company insiders. Comparatively, 1.1% of Antero Midstream 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.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Diversified Energy and Antero Midstream, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diversified Energy	1	1	6	2	2.90
Antero Midstream	1	4	1	1	2.29

Diversified Energy presently has a consensus target price of $22.00, suggesting a potential upside of 58.58%. Antero Midstream has a consensus target price of $24.00, suggesting a potential upside of 17.37%. Given Diversified Energy’s stronger consensus rating and higher possible upside, research analysts plainly believe Diversified Energy is more favorable than Antero Midstream.

Risk and Volatility

Diversified Energy has a beta of -0.32, suggesting that its stock price is 132% less volatile than the S&P 500. Comparatively, Antero Midstream has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Dividends

Diversified Energy pays an annual dividend of $1.16 per share and has a dividend yield of 8.4%. Antero Midstream pays an annual dividend of $0.90 per share and has a dividend yield of 4.4%. Diversified Energy pays out 41.6% of its earnings in the form of a dividend. Antero Midstream pays out 63.4% 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. Diversified Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Diversified Energy and Antero Midstream”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diversified Energy	$1.83 billion	0.54	$341.11 million	$2.79	4.97
Antero Midstream	$1.19 billion	8.13	$413.16 million	$1.42	14.40

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

Profitability

This table compares Diversified Energy and Antero Midstream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Diversified Energy	N/A	N/A	N/A
Antero Midstream	53.45%	33.53%	10.82%

Summary

Diversified Energy beats Antero Midstream on 9 of the 16 factors compared between the two stocks.

About Diversified Energy

Diversified Energy Company plc is an independent energy company focused on acquiring, operating and managing established natural gas and oil assets. Its production includes natural gas, natural gas liquids and oil. The company also owns and operates infrastructure used to gather and transport production, including pipelines and compression facilities. Its approach emphasizes maintaining and improving mature wells over their operating lives, as well as managing emissions and eventual well retirement.

About Antero Midstream

Antero Midstream Corporation owns and operates natural gas gathering, compression and water-handling infrastructure in the Appalachian Basin. Its assets support production in the Marcellus and Utica shale regions of West Virginia and Ohio. The company’s services include gathering and compression of natural gas, as well as water transportation and related infrastructure used in shale development. Antero Midstream’s operations primarily serve Antero Resources, connecting its production areas with downstream pipelines and supporting its water needs.