Diamondback Energy (NASDAQ:FANG – Get Rating) and Earthstone Energy (NYSE:ESTE – Get Rating) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.
Institutional and Insider Ownership
92.5% of Diamondback Energy shares are owned by institutional investors. 0.4% of Diamondback Energy shares are owned by insiders. Comparatively, 40.7% of Earthstone Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
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Profitability
This table compares Diamondback Energy and Earthstone Energy's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
| Diamondback Energy | 42.23% | 25.12% | 14.67% |
| Earthstone Energy | 17.51% | 25.59% | 15.06% |
Valuation and Earnings
This table compares Diamondback Energy and Earthstone Energy's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
| Diamondback Energy | $6.80 billion | 2.94 | $2.18 billion | $21.39 | 5.39 |
| Earthstone Energy | $419.64 million | 3.82 | $35.48 million | $1.85 | 6.08 |
Diamondback Energy has higher revenue and earnings than Earthstone Energy. Diamondback Energy is trading at a lower price-to-earnings ratio than Earthstone Energy, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of current ratings and price targets for Diamondback Energy and Earthstone Energy, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
| Diamondback Energy | 0 | 2 | 15 | 1 | 2.94 |
| Earthstone Energy | 1 | 2 | 3 | 0 | 2.33 |
Diamondback Energy currently has a consensus price target of $168.89, indicating a potential upside of 46.61%. Earthstone Energy has a consensus price target of $23.00, indicating a potential upside of 104.63%. Given Earthstone Energy's higher possible upside, analysts plainly believe Earthstone Energy is more favorable than Diamondback Energy.
Risk and Volatility
Diamondback Energy has a beta of 2.06, meaning that its share price is 106% more volatile than the S&P 500. Comparatively, Earthstone Energy has a beta of 2.04, meaning that its share price is 104% more volatile than the S&P 500.
Summary
Diamondback Energy beats Earthstone Energy on 9 of the 15 factors compared between the two stocks.
About Diamondback Energy
(Get Rating)
Diamondback Energy, Inc., an independent oil and natural gas company, focuses on the acquisition, development, exploration, and exploitation of unconventional and onshore oil and natural gas reserves in the Permian Basin in West Texas. It focuses on the development of the Spraberry and Wolfcamp formations of the Midland basin; and the Wolfcamp and Bone Spring formations of the Delaware basin, which are part of the Permian Basin in West Texas and New Mexico. As of December 31, 2021, the company's total acreage position was approximately 524,700 gross acres in the Permian Basin; and estimated proved oil and natural gas reserves were 1,788,991 thousand barrels of crude oil equivalent. It also held working interests in 5,289 gross producing wells, as well as royalty interests in 6,455 additional wells. In addition, the company owns mineral interests approximately 930,871 gross acres and 27,027 net royalty acres in the Permian Basin and Eagle Ford Shale; and owns, operates, develops, and acquires midstream infrastructure assets, including 866 miles of crude oil gathering pipelines, natural gas gathering pipelines, and an integrated water system in the Midland and Delaware Basins of the Permian Basin. Diamondback Energy, Inc. was founded in 2007 and is headquartered in Midland, Texas.
About Earthstone Energy
(Get Rating)
Earthstone Energy, Inc., an independent oil and gas company, engages in the acquisition, exploration, development, and production of oil and natural gas properties in the United States. The company's asset portfolio includes the Midland Basin of West Texas, Delaware Basin in New Mexico, and the Eagle Ford trend of south Texas. As of December 31, 2021, it operated 120 gross Eagle Ford wells, as well as had 147,587 thousand barrels of oil equivalent (MBOE) of total proved reserves comprised 93,575 MBOE of proved developed reserves and 54,012 MBOE of proved undeveloped reserves. Earthstone Energy, Inc. was incorporated in 1969 and is headquartered in The Woodlands, Texas.
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