Critical Analysis: Sanchez Energy (NYSE:SN) and Carbon Natural Gas (NYSE:CRBO)

Sanchez Energy (NYSE:SN) and Carbon Natural Gas (OTCMKTS:CRBO) are both small-cap oils/energy companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, risk, institutional ownership and valuation.

Volatility & Risk

Sanchez Energy has a beta of 2.46, indicating that its stock price is 146% more volatile than the S&P 500. Comparatively, Carbon Natural Gas has a beta of 1.49, indicating that its stock price is 49% more volatile than the S&P 500.



Analyst Recommendations

This is a breakdown of current recommendations and price targets for Sanchez Energy and Carbon Natural Gas, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sanchez Energy 1 6 0 0 1.86
Carbon Natural Gas 0 0 0 0 N/A

Sanchez Energy currently has a consensus price target of $2.07, suggesting a potential upside of 1,697.10%. Given Sanchez Energy’s higher probable upside, equities research analysts clearly believe Sanchez Energy is more favorable than Carbon Natural Gas.

Valuation & Earnings

This table compares Sanchez Energy and Carbon Natural Gas’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Sanchez Energy $740.33 million 0.01 $43.19 million ($0.32) -0.36
Carbon Natural Gas $53.05 million 0.72 $8.40 million N/A N/A

Sanchez Energy has higher revenue and earnings than Carbon Natural Gas.

Institutional & Insider Ownership

39.9% of Sanchez Energy shares are held by institutional investors. Comparatively, 6.3% of Carbon Natural Gas shares are held by institutional investors. 11.1% of Sanchez Energy shares are held by insiders. Comparatively, 71.7% of Carbon Natural Gas shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Sanchez Energy and Carbon Natural Gas’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sanchez Energy -9.24% -8.96% 1.59%
Carbon Natural Gas 10.71% 12.05% 3.24%

Summary

Carbon Natural Gas beats Sanchez Energy on 6 of the 11 factors compared between the two stocks.

Sanchez Energy Company Profile

Sanchez Energy Corporation, an independent exploration and production company, focuses on the acquisition and development of U.S. onshore unconventional oil and natural gas resources. It engages in the horizontal development of resources from the Eagle Ford Shale in South Texas. It also holds an undeveloped acreage position in the Tuscaloosa Marine Shale (TMS) in Mississippi and Louisiana. As of December 31, 2017, the company had assembled approximately 285,000 net acres in the Eagle Ford Shale; and owned approximately 37,000 net acres in the TMS. Sanchez Energy Corporation was founded in 2011 and is headquartered in Houston, Texas.

Carbon Natural Gas Company Profile

Carbon Energy Corporation, an independent oil and natural gas company, engages in the acquisition, exploration, development, and production of oil, natural gas, and natural gas liquids properties in the United States. It focuses on conventional and unconventional reservoirs, including shale, tight sand, and coalbed methane located in the Appalachian, Illinois, and Ventura Basins. As of December 31, 2017, it owned working interests in 2,600 net wells and royalty interests located in Kentucky, Ohio, Tennessee, and West Virginia, as well as had leasehold positions in approximately 189,000 net developed acres and approximately 222,400 net undeveloped acres located in the Appalachian basin. The company also owned working interests in 29 net coalbed methane wells in the Illinois Basin; had a leasehold position in approximately 1,900 net developed acres and approximately 58,000 net undeveloped acres. In addition, it owned working interests in 200 net wells; and had leasehold positions in approximately 2,300 net developed acres, as well as approximately 8,000 net undeveloped acres. The company was formerly known as Carbon Natural Gas Company and changed its name to Carbon Energy Corporation in June 2018. Carbon Energy Corporation is based in Denver, Colorado.

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