Critical Analysis: Matador Resources (NYSE:MTDR) vs. Vermilion Energy (VET)

Matador Resources (NYSE: MTDR) and Vermilion Energy (NYSE:VET) are both mid-cap oils/energy companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, dividends, risk and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Matador Resources and Vermilion Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Matador Resources 0 6 11 0 2.65
Vermilion Energy 0 0 4 0 3.00

Matador Resources presently has a consensus price target of $28.67, suggesting a potential upside of 8.22%. Vermilion Energy has a consensus price target of $57.88, suggesting a potential upside of 66.07%. Given Vermilion Energy’s stronger consensus rating and higher probable upside, analysts plainly believe Vermilion Energy is more favorable than Matador Resources.

Institutional and Insider Ownership

84.7% of Matador Resources shares are held by institutional investors. Comparatively, 53.6% of Vermilion Energy shares are held by institutional investors. 11.9% of Matador Resources shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Matador Resources and Vermilion Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Matador Resources $389.39 million 6.83 $258.23 million $1.94 13.65
Vermilion Energy $792.78 million 5.33 $513.13 million $0.47 74.15

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

Dividends

Vermilion Energy pays an annual dividend of $2.06 per share and has a dividend yield of 5.9%. Matador Resources does not pay a dividend. Vermilion Energy pays out 438.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Vermilion Energy has increased its dividend for 3 consecutive years.

Volatility and Risk

Matador Resources has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, Vermilion Energy has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500.

Profitability

This table compares Matador Resources and Vermilion Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Matador Resources 43.04% 5.45% 2.68%
Vermilion Energy 7.17% 4.52% 1.83%

Summary

Matador Resources beats Vermilion Energy on 10 of the 17 factors compared between the two stocks.

Matador Resources Company Profile

Matador Resources Company is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. The Company’s segments include exploration and production, and midstream. The Company’s operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana and East Texas. Additionally, the Company conducts midstream operations primarily, as of February 17, 2017, through its midstream joint venture, San Mateo Midstream, LLC (San Mateo or the Joint Venture).

Vermilion Energy Company Profile

Vermilion Energy Inc. produces oil and gas, and focuses on the acquisition, development and optimization of producing properties in North America, the Europe and Australia. Its segments include Canada, which includes production and assets focused in West Pembina near Drayton Valley, Alberta and Northgate in southeast Saskatchewan; France, which produces oil in France; Netherlands, which produces onshore gas and interests include over 24 onshore licenses and two offshore licenses; Germany, which holds interest in a four partner consortium; Ireland, which includes a non-operating interest in the offshore Corrib gas field located approximately 83 kilometers off the northwest coast of Ireland; Australia, which holds an operated working interest in the Wandoo field located approximately 80 kilometers offshore on the northwest shelf of Australia; the United States, which has interests in approximately 97,200 net acres of land in the Powder River Basin of northeastern Wyoming, and Corporate.

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