Reviewing CrossAmerica Partners (NYSE:CAPL) & SM Energy (NYSE:SM)

SM Energy (NYSE:SM) and CrossAmerica Partners (NYSE:CAPL) are both energy companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, risk, valuation, profitability and institutional ownership.

Insider and Institutional Ownership

94.6% of SM Energy shares are held by institutional investors. Comparatively, 24.1% of CrossAmerica Partners shares are held by institutional investors. 0.5% of SM Energy shares are held by company insiders. Comparatively, 52.0% of CrossAmerica Partners shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and recommmendations for SM Energy and CrossAmerica Partners, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SM Energy	0	6	10	1	2.71
CrossAmerica Partners	0	1	0	1	3.00

SM Energy presently has a consensus price target of $39.38, indicating a potential upside of 14.71%. Given SM Energy’s higher possible upside, research analysts plainly believe SM Energy is more favorable than CrossAmerica Partners.

Profitability

This table compares SM Energy and CrossAmerica Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SM Energy	18.20%	17.93%	7.70%
CrossAmerica Partners	1.43%	-37.73%	3.92%

Earnings and Valuation

This table compares SM Energy and CrossAmerica Partners”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SM Energy	$3.15 billion	2.59	$648.00 million	$5.08	6.76
CrossAmerica Partners	$3.66 billion	0.23	$39.11 million	$1.37	16.01

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

Dividends

SM Energy pays an annual dividend of $0.88 per share and has a dividend yield of 2.6%. CrossAmerica Partners pays an annual dividend of $2.10 per share and has a dividend yield of 9.6%. SM Energy pays out 17.3% of its earnings in the form of a dividend. CrossAmerica Partners pays out 153.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SM Energy has raised its dividend for 4 consecutive years.

Volatility and Risk

SM Energy has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, CrossAmerica Partners has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500.

Summary

SM Energy beats CrossAmerica Partners on 12 of the 17 factors compared between the two stocks.

About SM Energy

SM Energy Company, an independent energy company, engages in the acquisition, exploration, development, and production of oil, gas, and natural gas liquids in the state of Texas. It has working interests in oil and gas producing wells in the Midland Basin and South Texas. The company was formerly known as St. Mary Land & Exploration Company and changed its name to SM Energy Company in May 2010. SM Energy Company was founded in 1908 and is headquartered in Denver, Colorado.

About CrossAmerica Partners

CrossAmerica Partners LP engages in the wholesale distribution of motor fuels, operation of convenience stores, and ownership and leasing of real estate used in the retail distribution of motor fuels in the United States. It operates in two segments, Wholesale and Retail. The Wholesale segment engages in the wholesale distribution of motor fuels to lessee dealers, independent dealers, commission agents, and company operated retail sites. The Retail segment is involved in the sale of convenience merchandise items; and retail sale of motor fuels at company operated retail sites and retail sites operated by commission agents. CrossAmerica GP LLC operates as the general partner of the company. The company was formerly known as Lehigh Gas Partners LP and changed its name to CrossAmerica Partners LP in October 2014. The company was founded in 1992 and is based in Allentown, Pennsylvania.