Critical Analysis: Bonanza Creek Energy (BCEI) & Penn Virginia (PVAHQ)

Bonanza Creek Energy (NYSE: BCEI) and Penn Virginia (OTCMKTS:PVAHQ) are both oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.

Institutional & Insider Ownership

91.3% of Bonanza Creek Energy shares are held by institutional investors. 0.6% of Bonanza Creek Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations and price targets for Bonanza Creek Energy and Penn Virginia, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bonanza Creek Energy 0 3 0 0 2.00
Penn Virginia 0 1 0 0 2.00

Bonanza Creek Energy presently has a consensus target price of $25.00, suggesting a potential downside of 7.95%. Penn Virginia has a consensus target price of $49.00, suggesting a potential upside of Infinity. Given Penn Virginia’s higher probable upside, analysts clearly believe Penn Virginia is more favorable than Bonanza Creek Energy.

Earnings & Valuation

This table compares Bonanza Creek Energy and Penn Virginia’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bonanza Creek Energy $195.29 million 2.84 -$198.95 million ($153.96) -0.18
Penn Virginia N/A N/A N/A ($20.07) N/A

Penn Virginia has lower revenue, but higher earnings than Bonanza Creek Energy. Bonanza Creek Energy is trading at a lower price-to-earnings ratio than Penn Virginia, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Bonanza Creek Energy and Penn Virginia’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bonanza Creek Energy -33.79% -3.17% -1.09%
Penn Virginia -171.02% N/A -56.59%

Summary

Bonanza Creek Energy beats Penn Virginia on 5 of the 8 factors compared between the two stocks.

About Bonanza Creek Energy

Bonanza Creek Energy, Inc. (Bonanza Creek) is an independent energy company engaged in the acquisition, exploration, development and production of onshore oil and associated liquids-rich natural gas in the United States. The Company’s oil and liquids-weighted assets are concentrated primarily in the Wattenberg Field in Colorado and the Dorcheat Macedonia Field in southern Arkansas. In addition, the Company owns and operates oil-producing assets in the North Park Basin in Colorado and the McKamie Patton Field in southern Arkansas. The main areas in which the Company operates in the Rocky Mountain region are the Wattenberg Field in Weld County, Colorado and the North Park Basin in Jackson County, Colorado. Its Wattenberg Field operations are in the oil and liquids-weighted extension area of the Wattenberg Field targeting the Niobrara and Codell formations. In southern Arkansas, it targets the oil-rich Cotton Valley sands in the Dorcheat Macedonia and McKamie Patton Fields.

About Penn Virginia

Penn Virginia Corporation is an independent oil and gas company. The Company is engaged in the onshore exploration, development and production of crude oil, natural gas liquids (NGLs) and natural gas. Its operations consist primarily of drilling unconventional horizontal development wells, and operating its producing wells in the Eagle Ford Shale field or the Eagle Ford, in South Texas. It also has operations in Oklahoma, primarily in the Granite Wash. Its primary oil and gas assets are located in Gonzales and Lavaca Counties in South Texas, and Washita and Custer Counties in Western Oklahoma. As of March 10, 2017, the Company had a contiguous position of approximately 54,000 net acres in the core liquids-rich area or volatile oil window of the Eagle Ford in Gonzales and Lavaca Counties in Texas. As of December 31, 2016, its total proved reserves were approximately 50 million barrels of oil equivalent (MMBOE), of which 53% were proved developed reserves and 74% were crude oil.

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