Critical Analysis: Clayton Williams Energy (CWEI) vs. Jones Energy (JONE)

Clayton Williams Energy (NYSE: CWEI) and Jones Energy (NYSE:JONE) are both energy companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, valuation, dividends, institutional ownership, profitability, earnings and risk.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Clayton Williams Energy and Jones Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Clayton Williams Energy 0 0 0 0 N/A
Jones Energy 2 3 1 0 1.83

Jones Energy has a consensus target price of $1.90, indicating a potential upside of 88.12%. Given Jones Energy’s higher probable upside, analysts clearly believe Jones Energy is more favorable than Clayton Williams Energy.

Volatility & Risk

Clayton Williams Energy has a beta of 2.35, suggesting that its stock price is 135% more volatile than the S&P 500. Comparatively, Jones Energy has a beta of 2.57, suggesting that its stock price is 157% more volatile than the S&P 500.

Institutional and Insider Ownership

67.8% of Clayton Williams Energy shares are owned by institutional investors. Comparatively, 57.4% of Jones Energy shares are owned by institutional investors. 36.4% of Clayton Williams Energy shares are owned by company insiders. Comparatively, 37.2% of Jones Energy shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Clayton Williams Energy and Jones Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Clayton Williams Energy -16.83% -63.50% -7.44%
Jones Energy -105.90% -0.80% -0.35%

Valuation & Earnings

This table compares Clayton Williams Energy and Jones Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Clayton Williams Energy N/A N/A N/A ($21.71) -6.08
Jones Energy $127.85 million 0.77 -$42.55 million ($2.65) -0.38

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

Summary

Jones Energy beats Clayton Williams Energy on 9 of the 11 factors compared between the two stocks.

Clayton Williams Energy Company Profile

Clayton Williams Energy, Inc. is an independent oil and gas company engaged in the exploration for and production of oil and natural gas primarily in its core area in Southern Reeves County, Texas. The Company operates through two segments: oil and gas exploration and production, and contract drilling services. The Company focuses on developmental drilling in prolific oil shale provinces. The Company has holdings in the oil shale plays in the United States, the Wolfcamp Shale in the Southern Delaware Basin of West Texas. Its exploration program consists of generating exploratory prospects, leasing the acreage related to these prospects, drilling exploratory wells on these prospects to determine if recoverable oil and gas reserves exist, drilling developmental wells on these prospects and producing and selling any resulting oil and gas production. The Permian Basin is a sedimentary basin in West Texas and Southeastern New Mexico.

Jones Energy Company Profile

Jones Energy, Inc. is an independent oil and gas company engaged in the exploration, development, production and acquisition of oil and natural gas properties. The Company’s assets are located within the Anadarko and Arkoma basins of Texas and Oklahoma. It owns leasehold interests in oil and natural gas producing properties, as well as in undeveloped acreage, located in the Anadarko and Arkoma basins in Texas and Oklahoma. The Company’s oil is generally sold under short-term, extendable and cancellable agreements with unaffiliated purchasers. The Company’s natural gas is sold at delivery points at or near producing wells to natural gas gathering and marketing companies. Its total estimated proved reserves are approximately 101.7 million barrels of oil equivalent (MMBoe). Approximately 25% of its total estimated proved reserves consist of oil, over 32% consist of natural gas liquids (NGLs) and over 43% consist of natural gas. Its properties include over 1,020 gross producing wells.

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