Reviewing Kosmos Energy (NYSE:KOS) & Centennial Resource Development (NYSE:CDEV)

Kosmos Energy (NYSE:KOS) and Centennial Resource Development (NASDAQ:CDEV) are both small-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Institutional & Insider Ownership

92.1% of Kosmos Energy shares are owned by institutional investors. Comparatively, 96.8% of Centennial Resource Development shares are owned by institutional investors. 3.8% of Kosmos Energy shares are owned by insiders. Comparatively, 31.9% of Centennial Resource Development shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Kosmos Energy and Centennial Resource Development’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kosmos Energy $1.51 billion 0.50 -$55.78 million ($0.05) -37.40
Centennial Resource Development $944.33 million 0.30 $15.80 million $0.19 5.32

Centennial Resource Development has lower revenue, but higher earnings than Kosmos Energy. Kosmos Energy is trading at a lower price-to-earnings ratio than Centennial Resource Development, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and price targets for Kosmos Energy and Centennial Resource Development, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kosmos Energy 0 7 2 0 2.22
Centennial Resource Development 8 9 3 0 1.75

Kosmos Energy presently has a consensus price target of $2.27, indicating a potential upside of 21.21%. Centennial Resource Development has a consensus price target of $4.75, indicating a potential upside of 370.30%. Given Centennial Resource Development’s higher possible upside, analysts clearly believe Centennial Resource Development is more favorable than Kosmos Energy.

Volatility and Risk

Kosmos Energy has a beta of 3.45, indicating that its stock price is 245% more volatile than the S&P 500. Comparatively, Centennial Resource Development has a beta of 7.57, indicating that its stock price is 657% more volatile than the S&P 500.

Profitability

This table compares Kosmos Energy and Centennial Resource Development’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kosmos Energy -13.35% -7.93% -1.48%
Centennial Resource Development -56.81% -0.90% -0.63%

Summary

Centennial Resource Development beats Kosmos Energy on 10 of the 14 factors compared between the two stocks.

About Kosmos Energy

Kosmos Energy Ltd., a deepwater independent oil and gas exploration and production company, focuses along the Atlantic Margins. Its primary assets include production offshore Ghana, Equatorial Guinea, and U.S. Gulf of Mexico, as well as a gas development offshore Mauritania and Senegal. The company also maintains an exploration program balanced between proven basin infrastructure-led exploration, emerging basins, and frontier basins. Kosmos Energy Ltd. was founded in 2003 and is headquartered in Dallas, Texas.

About Centennial Resource Development

Centennial Resource Development, Inc., an independent oil and natural gas company, focuses on the development of unconventional oil and associated liquids-rich natural gas reserves in the United States. The company's assets primarily focus on the Delaware Basin, a sub-basin of the Permian Basin. Its properties consist of acreage blocks primarily in Reeves County in West Texas and Lea County in New Mexico. As of December 31, 2018, it leased or acquired approximately 80,223 net acres; and owned 1,597 net mineral acres in the Delaware Basin. The company was formerly known as Silver Run Acquisition Corporation and changed its name to Centennial Resource Development, Inc. in October 2016. Centennial Resource Development, Inc. was incorporated in 2015 and is headquartered in Denver, Colorado.

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