Financial Analysis: Cheniere Energy (NYSE:LNG) versus Devon Energy (NYSE:DVN)

Devon Energy (NYSE:DVN) and Cheniere Energy (NYSE:LNG) are both large-cap energy companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Risk & Volatility

Devon Energy has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500. Comparatively, Cheniere Energy has a beta of -0.01, suggesting that its share price is 101% less volatile than the S&P 500.

Dividends

Devon Energy pays an annual dividend of $1.28 per share and has a dividend yield of 2.8%. Cheniere Energy pays an annual dividend of $2.22 per share and has a dividend yield of 0.8%. Devon Energy pays out 35.7% of its earnings in the form of a dividend. Cheniere Energy pays out 36.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Devon Energy has increased its dividend for 1 consecutive years. Devon Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

69.7% of Devon Energy shares are held by institutional investors. Comparatively, 87.3% of Cheniere Energy shares are held by institutional investors. 4.6% of Devon Energy shares are held by insiders. Comparatively, 0.5% of Cheniere Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Devon Energy and Cheniere Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Devon Energy	13.71%	15.22%	7.39%
Cheniere Energy	7.23%	38.95%	9.34%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Devon Energy and Cheniere Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Devon Energy	0	5	23	2	2.90
Cheniere Energy	0	2	16	3	3.05

Devon Energy currently has a consensus price target of $59.56, indicating a potential upside of 32.19%. Cheniere Energy has a consensus price target of $298.88, indicating a potential upside of 11.00%. Given Devon Energy’s higher probable upside, research analysts clearly believe Devon Energy is more favorable than Cheniere Energy.

Earnings and Valuation

This table compares Devon Energy and Cheniere Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Devon Energy	$16.54 billion	1.69	$2.64 billion	$3.59	12.55
Cheniere Energy	$20.40 billion	2.77	$5.33 billion	$6.08	44.29

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

Summary

Cheniere Energy beats Devon Energy on 10 of the 18 factors compared between the two stocks.

About Devon Energy

Devon Energy Corporation, an independent energy company, engages in the exploration, development, and production of oil, natural gas, and natural gas liquids in the United States. It operates in Delaware, Eagle Ford, Anadarko, Williston, and Powder River Basins. The company was founded in 1971 and is headquartered in Oklahoma City, Oklahoma.

About Cheniere Energy

Cheniere Energy, Inc., an energy infrastructure company, primarily engages in the liquefied natural gas (LNG) related businesses in the United States. It owns and operates the Sabine Pass LNG terminal in Cameron Parish, Louisiana; and the Corpus Christi LNG terminal near Corpus Christi, Texas. The company also owns Creole Trail pipeline, a 94-mile natural gas supply pipeline that interconnects the Sabine Pass LNG Terminal with several interstate and intrastate pipelines; and operates Corpus Christi pipeline, a 21.5-mile natural gas supply pipeline that interconnects the Corpus Christi LNG terminal with various interstate and intrastate natural gas pipelines. It is also involved in the LNG and natural gas marketing business. The company was incorporated in 1983 and is headquartered in Houston, Texas.