Financial Contrast: Diamondback Energy (NASDAQ:FANG) and Northern Oil and Gas (NYSE:NOG)

Northern Oil and Gas (NYSE:NOG) and Diamondback Energy (NASDAQ:FANG) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Valuation & Earnings

This table compares Northern Oil and Gas and Diamondback Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northern Oil and Gas	$2.16 billion	1.79	$922.97 million	$8.33	4.65
Diamondback Energy	$9.58 billion	5.19	$3.14 billion	$17.47	9.76

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

Profitability

This table compares Northern Oil and Gas and Diamondback Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northern Oil and Gas	33.44%	27.52%	12.28%
Diamondback Energy	33.64%	13.68%	7.93%

Analyst Ratings

This is a summary of current recommendations and price targets for Northern Oil and Gas and Diamondback Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northern Oil and Gas	0	4	5	1	2.70
Diamondback Energy	1	3	18	2	2.88

Northern Oil and Gas currently has a consensus target price of $47.20, suggesting a potential upside of 21.87%. Diamondback Energy has a consensus target price of $209.83, suggesting a potential upside of 23.12%. Given Diamondback Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Diamondback Energy is more favorable than Northern Oil and Gas.

Volatility and Risk

Northern Oil and Gas has a beta of 1.85, meaning that its share price is 85% more volatile than the S&P 500. Comparatively, Diamondback Energy has a beta of 1.88, meaning that its share price is 88% more volatile than the S&P 500.

Institutional and Insider Ownership

98.8% of Northern Oil and Gas shares are held by institutional investors. Comparatively, 90.0% of Diamondback Energy shares are held by institutional investors. 2.8% of Northern Oil and Gas shares are held by insiders. Comparatively, 0.5% of Diamondback Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Northern Oil and Gas pays an annual dividend of $1.68 per share and has a dividend yield of 4.3%. Diamondback Energy pays an annual dividend of $3.60 per share and has a dividend yield of 2.1%. Northern Oil and Gas pays out 20.2% of its earnings in the form of a dividend. Diamondback Energy pays out 20.6% 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. Northern Oil and Gas is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Diamondback Energy beats Northern Oil and Gas on 11 of the 17 factors compared between the two stocks.

About Northern Oil and Gas

Northern Oil and Gas, Inc., an independent energy company, engages in the acquisition, exploration, exploitation, development, and production of crude oil and natural gas properties in the United States. It primarily holds interests in the Williston Basin, the Appalachian Basin, and the Permian Basin in the United States. The company is based in Minnetonka, Minnesota.

About Diamondback Energy

Diamondback Energy, Inc., an independent oil and natural gas company, acquires, develops, explores, and exploits unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas. It focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico. The company also owns and operates midstream infrastructure assets, in the Midland and Delaware Basins of the Permian Basin. Diamondback Energy, Inc. was founded in 2007 and is headquartered in Midland, Texas.