Vanguard Natural Resources (NASDAQ:VNR) and Independence Contract Drilling (ICD) Financial Review

Independence Contract Drilling (NYSE: ICD) and Vanguard Natural Resources (NASDAQ:VNR) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitabiliy and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Independence Contract Drilling and Vanguard Natural Resources, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independence Contract Drilling	0	1	6	0	2.86
Vanguard Natural Resources	4	1	0	0	1.20

Independence Contract Drilling presently has a consensus target price of $7.10, suggesting a potential upside of 97.77%. Given Independence Contract Drilling’s stronger consensus rating and higher possible upside, analysts plainly believe Independence Contract Drilling is more favorable than Vanguard Natural Resources.

Valuation & Earnings

This table compares Independence Contract Drilling and Vanguard Natural Resources’ gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Independence Contract Drilling	$73.97 million	1.83	$6.78 million	($0.81)	-4.43
Vanguard Natural Resources	N/A	N/A	N/A	($9.14)	-0.02

Independence Contract Drilling has higher revenue and earnings than Vanguard Natural Resources. Independence Contract Drilling is trading at a lower price-to-earnings ratio than Vanguard Natural Resources, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Independence Contract Drilling has a beta of 2.76, suggesting that its stock price is 176% more volatile than the S&P 500. Comparatively, Vanguard Natural Resources has a beta of 1.53, suggesting that its stock price is 53% more volatile than the S&P 500.

Profitability

This table compares Independence Contract Drilling and Vanguard Natural Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independence Contract Drilling	-40.75%	-8.62%	-7.24%
Vanguard Natural Resources	-7.50%	N/A	-2.74%

Insider and Institutional Ownership

80.6% of Independence Contract Drilling shares are owned by institutional investors. Comparatively, 4.0% of Vanguard Natural Resources shares are owned by institutional investors. 11.8% of Independence Contract Drilling shares are owned by insiders. Comparatively, 1.3% of Vanguard Natural Resources shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Independence Contract Drilling beats Vanguard Natural Resources on 8 of the 11 factors compared between the two stocks.

Vanguard Natural Resources Company Profile

Vanguard Natural Resources, LLC is focused on the acquisition and development of oil and natural gas properties in the United States. Through its operating subsidiaries, the Company owns properties, and oil and natural gas reserves primarily located in over 10 operating basins: the Green River Basin in Wyoming; the Permian Basin in West Texas and New Mexico; the Gulf Coast Basin in Texas, Louisiana, Mississippi and Alabama; the Anadarko Basin in Oklahoma and North Texas; the Piceance Basin in Colorado; the Big Horn Basin in Wyoming and Montana; the Arkoma Basin in Arkansas and Oklahoma; the Williston Basin in North Dakota and Montana; the Wind River Basin in Wyoming, and the Powder River Basin in Wyoming. The Company owns working interests in approximately 14,460 gross (over 5,280 net) productive wells. In addition, the Company owns approximately 881,510 gross undeveloped leasehold acres surrounding its existing wells.