Financial Contrast: Kosmos Energy (NYSE:KOS) vs. Matador Resources (NYSE:MTDR)

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Matador Resources and Kosmos Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Matador Resources	0	1	13	0	2.93
Kosmos Energy	0	3	3	0	2.50

Matador Resources presently has a consensus target price of $72.93, suggesting a potential upside of 85.07%. Kosmos Energy has a consensus target price of $5.27, suggesting a potential upside of 193.41%. Given Kosmos Energy’s higher probable upside, analysts clearly believe Kosmos Energy is more favorable than Matador Resources.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Matador Resources	$3.48 billion	1.42	$846.07 million	$7.14	5.52
Kosmos Energy	$1.68 billion	0.51	$213.52 million	$0.39	4.60

Matador Resources has higher revenue and earnings than Kosmos Energy. Kosmos 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.

Dividends

Matador Resources pays an annual dividend of $1.25 per share and has a dividend yield of 3.2%. Kosmos Energy pays an annual dividend of $0.18 per share and has a dividend yield of 10.1%. Matador Resources pays out 17.5% of its earnings in the form of a dividend. Kosmos Energy pays out 46.4% 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.

Insider and Institutional Ownership

92.0% of Matador Resources shares are held by institutional investors. Comparatively, 95.3% of Kosmos Energy shares are held by institutional investors. 6.1% of Matador Resources shares are held by insiders. Comparatively, 2.0% of Kosmos Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Matador Resources has a beta of 2.74, meaning that its share price is 174% more volatile than the S&P 500. Comparatively, Kosmos Energy has a beta of 1.94, meaning that its share price is 94% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Matador Resources	25.26%	18.52%	9.71%
Kosmos Energy	12.21%	31.08%	6.53%

Summary

Matador Resources beats Kosmos Energy on 12 of the 16 factors compared between the two stocks.

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.

About Kosmos Energy

Kosmos Energy Ltd., together with its subsidiaries, engages in the exploration, development, and production of oil and gas along the Atlantic Margins in the United States. The company’s primary assets include production projects located in offshore Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico, as well as gas projects located in offshore Mauritania and Senegal. It undertakes a proven basin exploration program in Equatorial Guinea and the U.S. Gulf of Mexico. Kosmos Energy Ltd. was founded in 2003 and is headquartered in Dallas, Texas.