Financial Analysis: Magnolia Oil & Gas (NYSE:MGY) and Petróleo Brasileiro S.A. – Petrobras (NYSE:PBR)

Magnolia Oil & Gas (NYSE:MGYGet Rating) and Petróleo Brasileiro S.A. – Petrobras (NYSE:PBRGet Rating) are both oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Profitability

This table compares Magnolia Oil & Gas and Petróleo Brasileiro S.A. – Petrobras’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Magnolia Oil & Gas 38.85% 47.42% 27.43%
Petróleo Brasileiro S.A. – Petrobras 23.67% 23.24% 8.67%

Insider & Institutional Ownership

96.9% of Magnolia Oil & Gas shares are held by institutional investors. Comparatively, 11.9% of Petróleo Brasileiro S.A. – Petrobras shares are held by institutional investors. 4.8% of Magnolia Oil & Gas shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Magnolia Oil & Gas and Petróleo Brasileiro S.A. – Petrobras’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Magnolia Oil & Gas $1.08 billion 5.39 $417.28 million $2.34 10.97
Petróleo Brasileiro S.A. – Petrobras $83.97 billion 1.09 $19.88 billion $4.34 3.24

Petróleo Brasileiro S.A. – Petrobras has higher revenue and earnings than Magnolia Oil & Gas. Petróleo Brasileiro S.A. – Petrobras is trading at a lower price-to-earnings ratio than Magnolia Oil & Gas, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Magnolia Oil & Gas has a beta of 2.12, indicating that its stock price is 112% more volatile than the S&P 500. Comparatively, Petróleo Brasileiro S.A. – Petrobras has a beta of 1.44, indicating that its stock price is 44% more volatile than the S&P 500.

Dividends

Magnolia Oil & Gas pays an annual dividend of $0.40 per share and has a dividend yield of 1.6%. Petróleo Brasileiro S.A. – Petrobras pays an annual dividend of $2.59 per share and has a dividend yield of 18.4%. Magnolia Oil & Gas pays out 17.1% of its earnings in the form of a dividend. Petróleo Brasileiro S.A. – Petrobras pays out 59.7% 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. Magnolia Oil & Gas has increased its dividend for 1 consecutive years.

Analyst Ratings

This is a summary of current ratings and target prices for Magnolia Oil & Gas and Petróleo Brasileiro S.A. – Petrobras, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magnolia Oil & Gas 0 5 6 0 2.55
Petróleo Brasileiro S.A. – Petrobras 0 2 6 0 2.75

Magnolia Oil & Gas currently has a consensus price target of $25.95, indicating a potential upside of 1.09%. Petróleo Brasileiro S.A. – Petrobras has a consensus price target of $13.46, indicating a potential downside of 4.42%. Given Magnolia Oil & Gas’ higher possible upside, equities analysts clearly believe Magnolia Oil & Gas is more favorable than Petróleo Brasileiro S.A. – Petrobras.

Summary

Magnolia Oil & Gas beats Petróleo Brasileiro S.A. – Petrobras on 11 of the 16 factors compared between the two stocks.

Magnolia Oil & Gas Company Profile (Get Rating)

Magnolia Oil & Gas Corporation engages in the acquisition, development, exploration, and production of oil, natural gas, and natural gas liquids reserves in the United States. Its properties are located primarily in Karnes County and the Giddings Field in South Texas principally comprising the Eagle Ford Shale and the Austin Chalk formation. As of December 31, 2021, the company's assets consisted of a total leasehold position of 4,71,263 net acres, including 23,785 net acres in Karnes and 4,47,478 net acres in the Giddings area, as well as holds 1,292 net wells with a total production capacity of 66.0 thousand barrels of oil equivalent per day. The company was incorporated in 2017 and is headquartered in Houston, Texas.

Petróleo Brasileiro S.A. – Petrobras Company Profile (Get Rating)

Petróleo Brasileiro S.A. – Petrobras explores for, produces, and sells oil and gas in Brazil and internationally. The company operates through Exploration and Production; Refining, Transportation and Marketing; Gas and Power; and Corporate and Other Businesses segments. It engages in prospecting, drilling, refining, processing, trading, and transporting crude oil from producing onshore and offshore oil fields, and shale or other rocks, as well as oil products, natural gas, and other liquid hydrocarbons. The Exploration and Production segment explores, develops, and produces crude oil, natural gas liquids, and natural gas primarily for supplies to the domestic refineries. The Refining, Transportation and Marketing segment engages in the refining, logistics, transport, marketing, and trading of crude oil and oil products; exportation of ethanol; and extraction and processing of shale, as well as holding interests in petrochemical companies. The Gas and Power segment is involved in the logistic and trading of natural gas and electricity; transportation and trading of LNG; generation of electricity through thermoelectric power plants; holding interests in transportation and distribution of natural gas; and fertilizer production and natural gas processing business. The Corporate and Other Businesses segment produces biodiesel and its co-products, and ethanol; and distributes oil products. Petróleo Brasileiro S.A. – Petrobras was incorporated in 1953 and is headquartered in Rio de Janeiro, Brazil.

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