Legacy Reserves (NASDAQ: LGCY) and SRC Energy (NASDAQ:SRCI) are both small-cap oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, risk, dividends, institutional ownership, profitabiliy and analyst recommendations.
Earnings & Valuation
This table compares Legacy Reserves and SRC Energy’s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Legacy Reserves | N/A | N/A | N/A | ($2.31) | -0.55 |
| SRC Energy | $128.57 million | 13.04 | $70.33 million | N/A | N/A |
SRC Energy has higher revenue and earnings than Legacy Reserves.
Analyst Ratings
This is a breakdown of current recommendations and price targets for Legacy Reserves and SRC Energy, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Legacy Reserves | 1 | 2 | 0 | 0 | 1.67 |
| SRC Energy | 0 | 3 | 7 | 0 | 2.70 |
Legacy Reserves currently has a consensus target price of $1.88, suggesting a potential upside of 47.14%. SRC Energy has a consensus target price of $12.00, suggesting a potential upside of 43.71%. Given Legacy Reserves’ higher probable upside, equities analysts clearly believe Legacy Reserves is more favorable than SRC Energy.
Profitability
This table compares Legacy Reserves and SRC Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Legacy Reserves | -41.60% | N/A | -4.11% |
| SRC Energy | 44.12% | 9.36% | 7.56% |
Institutional and Insider Ownership
20.9% of Legacy Reserves shares are held by institutional investors. 10.2% of Legacy Reserves shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Summary
SRC Energy beats Legacy Reserves on 6 of the 9 factors compared between the two stocks.
About Legacy Reserves
Legacy Reserves LP (Legacy) is a master limited partnership company. The Company focuses on the acquisition and development of oil and natural gas properties located in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions of the United States. As of December 31, 2016, the Company had proved reserves of approximately 144.8 million barrels of crude oil equivalent (MMBoe), of which 72% were natural gas, 28% were oil and natural gas liquids (NGLs) and 94% were classified as proved developed producing. As of December 31, 2016, the Company owned interests in producing oil and natural gas properties in 627 fields in the Permian Basin, East Texas, Piceance Basin of Colorado, Texas Panhandle, Wyoming, North Dakota, Montana, Oklahoma and various other states, from 10,775 gross productive wells, of which 3,799 were operated and 6,976 were non-operated. The Company’s fields and regions include East Texas, Piceance Basin, Spraberry/War San, Lea, Texas Panhandle and Deep Rock.
About SRC Energy
SRC Energy Inc., formerly Synergy Resources Corporation, is an independent oil and natural gas company. The Company is engaged in the acquisition, development and production of crude oil and natural gas in and around the Denver-Julesburg Basin (D-J Basin) of Colorado. The D-J Basin generally extends from the Denver metropolitan area throughout northeast Colorado into Wyoming, Nebraska, and Kansas. The D-J Basin contains hydrocarbon-bearing deposits in various formations, including the Niobrara, Codell, Greenhorn, Shannon, Sussex, J-Sand and D-Sand. The Company’s drilling and completion activities are focused in the Wattenberg Field, an area that covers the western flank of the D-J Basin, predominantly in Weld County, Colorado. The Company is focused on the horizontal development of the Codell and Niobrara formations. As of December 31, 2016, the Company was the operator of 324 gross (288 net) producing wells and participated as non-operators in 307 gross (65 net) producing wells.
Receive News & Ratings for Legacy Reserves LP Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Legacy Reserves LP and related companies with MarketBeat.com's FREE daily email newsletter.
