Critical Analysis: CVR Energy (CVI) and Western Refining (WNR)

CVR Energy (NYSE: CVI) and Western Refining (NYSE:WNR) are both oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.

Analyst Recommendations

This is a breakdown of current ratings and price targets for CVR Energy and Western Refining, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CVR Energy	0	2	0	0	2.00
Western Refining	0	6	3	0	2.33

CVR Energy presently has a consensus price target of $14.50, indicating a potential downside of 18.95%. Western Refining has a consensus price target of $30.75, indicating a potential downside of 15.01%. Given Western Refining’s stronger consensus rating and higher possible upside, analysts plainly believe Western Refining is more favorable than CVR Energy.

Volatility & Risk

CVR Energy has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500. Comparatively, Western Refining has a beta of 1.26, suggesting that its share price is 26% more volatile than the S&P 500.

Insider and Institutional Ownership

98.5% of CVR Energy shares are held by institutional investors. Comparatively, 64.8% of Western Refining shares are held by institutional investors. 82.0% of CVR Energy shares are held by company insiders. Comparatively, 26.5% of Western Refining shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

CVR Energy pays an annual dividend of $2.00 per share and has a dividend yield of 11.2%. Western Refining pays an annual dividend of $1.52 per share and has a dividend yield of 4.2%. CVR Energy pays out 714.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Refining pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Western Refining has raised its dividend for 4 consecutive years.

Earnings and Valuation

This table compares CVR Energy and Western Refining’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
CVR Energy	$5.54 billion	0.28	$313.00 million	$0.28	63.90
Western Refining	N/A	N/A	N/A	$1.52	23.80

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

Profitability

This table compares CVR Energy and Western Refining’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CVR Energy	0.44%	2.10%	0.88%
Western Refining	0.90%	2.76%	1.52%

Summary

Western Refining beats CVR Energy on 9 of the 14 factors compared between the two stocks.

About CVR Energy

CVR Energy, Inc. (CVR Energy) is a holding company. The Company is engaged in the petroleum refining and nitrogen fertilizer manufacturing through its holdings in CVR Refining LP (CVR Refining or the Refining Partnership) and CVR Partners LP (CVR Partners or the Nitrogen Fertilizer Partnership). It operates under two business segments: petroleum (the petroleum and related businesses operated by the Refining Partnership) and nitrogen fertilizer (the nitrogen fertilizer business operated by the Nitrogen Fertilizer Partnership). The Company’s Refining Partnership is an independent petroleum refiner and marketer of transportation fuels. Its Nitrogen Fertilizer Partnership produces and markets nitrogen fertilizers in the form of urea and ammonium nitrate (UAN) and ammonia. The petroleum business consists of a coking medium-sour crude oil refinery in Coffeyville, Kansas and a crude oil refinery in Wynnewood, Oklahoma.

About Western Refining

Western Refining, Inc. is an independent crude oil refiner and marketer of refined products. The Company operates through segments, including refining, Western Refining Logistics, LP (WNRL), retail and Other. As of December 31, 2016, the refining segment owned and operated three refineries that process crude oil and other feedstocks primarily into gasoline, diesel fuel, jet fuel and asphalt. The refining segment also sells refined products in the Mid-Atlantic region and Mexico. WNRL owns and operates terminal, storage, transportation and wholesale assets in the Southwest and terminal and storage assets in the Upper Great Plains region. The retail segment operates retail convenience stores and unmanned commercial fleet fueling (cardlock) locations located in the Southwest (Southwest Retail) and Upper Great Plains (SuperAmerica) regions. It markets refined products to a customer base, including wholesale distributors and retail chains.