Analyzing Matador Resources (NYSE:MTDR) & Southwestern Energy (NYSE:SWN)

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

Analyst Ratings

This is a summary of recent ratings and target prices for Southwestern Energy and Matador Resources, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southwestern Energy	1	9	4	0	2.21
Matador Resources	0	0	10	0	3.00

Southwestern Energy presently has a consensus target price of $8.11, suggesting a potential upside of 10.97%. Matador Resources has a consensus target price of $72.50, suggesting a potential upside of 7.25%. Given Southwestern Energy’s higher possible upside, research analysts clearly believe Southwestern Energy is more favorable than Matador Resources.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Southwestern Energy	23.87%	11.74%	5.81%
Matador Resources	30.14%	21.54%	11.56%

Earnings and Valuation

This table compares Southwestern Energy and Matador Resources’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southwestern Energy	$6.52 billion	1.23	$1.56 billion	$1.41	5.18
Matador Resources	$2.81 billion	2.88	$846.07 million	$7.05	9.59

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

Risk and Volatility

Southwestern Energy has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500. Comparatively, Matador Resources has a beta of 3.32, meaning that its stock price is 232% more volatile than the S&P 500.

Insider and Institutional Ownership

87.0% of Southwestern Energy shares are held by institutional investors. Comparatively, 92.0% of Matador Resources shares are held by institutional investors. 0.7% of Southwestern Energy shares are held by company insiders. Comparatively, 6.0% of Matador Resources 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.

Summary

Matador Resources beats Southwestern Energy on 11 of the 14 factors compared between the two stocks.

About Southwestern Energy

Southwestern Energy Company, an independent energy company, engages in the exploration, development, and production of natural gas, oil, and natural gas liquids (NGLs) in the United States. It operates through two segments, Exploration and Production, and Marketing. The company focuses on the development of unconventional natural gas and oil reservoirs located in Pennsylvania, West Virginia, Ohio, and Louisiana. It also engages in the marketing and transportation of natural gas, oil, and NGLs. It serves LNG exporters, energy companies, utilities, and industrial purchasers of natural gas. Southwestern Energy Company was incorporated in 1929 and is headquartered in Spring, Texas.

About Matador Resources

Matador Resources Company, an independent energy company, engages in the exploration, development, production, and acquisition of oil and natural gas resources in the United States. It operates through two segments, Exploration and Production; and Midstream. The company primarily holds interests in the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. It also operates the Eagle Ford shale play in South Texas; and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. In addition, the company conducts midstream operations in support of its exploration, development, and production operations. Further, it provides natural gas processing and oil transportation services; and oil, natural gas, and produced water gathering services, as well as produced water disposal services to third parties. The company sells natural gas to unaffiliated independent marketing companies and unaffiliated midstream companies. The company was formerly known as Matador Holdco, Inc. and changed its name to Matador Resources Company in August 2011. Matador Resources Company was founded in 2003 and is headquartered in Dallas, Texas.