Analyzing Northern Oil and Gas (NYSE:NOG) and Diamondback Energy (NASDAQ:FANG)

Diamondback Energy (NASDAQ:FANG) and Northern Oil and Gas (NYSE:NOG) are both oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, institutional ownership and risk.

Volatility & Risk

Diamondback Energy has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500. Comparatively, Northern Oil and Gas has a beta of 1.85, suggesting that its share price is 85% more volatile than the S&P 500.

Dividends

Diamondback Energy pays an annual dividend of $3.60 per share and has a dividend yield of 2.1%. Northern Oil and Gas pays an annual dividend of $1.68 per share and has a dividend yield of 4.3%. Diamondback Energy pays out 20.6% of its earnings in the form of a dividend. Northern Oil and Gas pays out 20.2% 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. Northern Oil and Gas is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings and price targets for Diamondback Energy and Northern Oil and Gas, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diamondback Energy	1	3	18	2	2.88
Northern Oil and Gas	0	4	5	1	2.70

Diamondback Energy currently has a consensus target price of $209.83, suggesting a potential upside of 23.12%. Northern Oil and Gas has a consensus target price of $47.20, suggesting a potential upside of 21.87%. Given Diamondback Energy’s stronger consensus rating and higher possible upside, equities analysts clearly believe Diamondback Energy is more favorable than Northern Oil and Gas.

Earnings & Valuation

This table compares Diamondback Energy and Northern Oil and Gas”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diamondback Energy	$9.58 billion	5.19	$3.14 billion	$17.47	9.76
Northern Oil and Gas	$2.16 billion	1.79	$922.97 million	$8.33	4.65

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

Profitability

This table compares Diamondback Energy and Northern Oil and Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Diamondback Energy	33.64%	13.68%	7.93%
Northern Oil and Gas	33.44%	27.52%	12.28%

Institutional & Insider Ownership

90.0% of Diamondback Energy shares are owned by institutional investors. Comparatively, 98.8% of Northern Oil and Gas shares are owned by institutional investors. 0.5% of Diamondback Energy shares are owned by company insiders. Comparatively, 2.8% of Northern Oil and Gas shares are owned by company 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.

Summary

Diamondback Energy beats Northern Oil and Gas on 11 of the 17 factors compared between the two stocks.

About Diamondback Energy

Diamondback Energy, Inc., an independent oil and natural gas company, acquires, develops, explores, and exploits unconventional, 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. The company also owns and operates midstream infrastructure assets, in the Midland and Delaware Basins of the Permian Basin. Diamondback Energy, Inc. was founded in 2007 and is headquartered in Midland, Texas.

About Northern Oil and Gas

Northern Oil and Gas, Inc., an independent energy company, engages in the acquisition, exploration, exploitation, development, and production of crude oil and natural gas properties in the United States. It primarily holds interests in the Williston Basin, the Appalachian Basin, and the Permian Basin in the United States. The company is based in Minnetonka, Minnesota.