Financial Analysis: APA (NASDAQ:APA) versus Murphy Oil (NYSE:MUR)

APA (NASDAQ:APA) and Murphy Oil (NYSE:MUR) are both mid-cap energy companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, analyst recommendations, institutional ownership, valuation, earnings and profitability.

Volatility & Risk

APA has a beta of 3.26, meaning that its share price is 226% more volatile than the S&P 500. Comparatively, Murphy Oil has a beta of 2.18, meaning that its share price is 118% more volatile than the S&P 500.

Profitability

This table compares APA and Murphy Oil’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
APA	24.36%	27.86%	7.99%
Murphy Oil	13.44%	7.66%	4.28%

Dividends

APA pays an annual dividend of $1.00 per share and has a dividend yield of 4.8%. Murphy Oil pays an annual dividend of $1.30 per share and has a dividend yield of 4.6%. APA pays out 44.2% of its earnings in the form of a dividend. Murphy Oil pays out 48.3% 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. APA is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

83.0% of APA shares are owned by institutional investors. Comparatively, 78.3% of Murphy Oil shares are owned by institutional investors. 1.3% of APA shares are owned by insiders. Comparatively, 5.9% of Murphy Oil shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares APA and Murphy Oil”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
APA	$9.74 billion	0.78	$2.86 billion	$2.26	9.26
Murphy Oil	$3.02 billion	1.37	$407.17 million	$2.69	10.58

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

Analyst Recommendations

This is a summary of current recommendations for APA and Murphy Oil, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
APA	4	10	5	0	2.05
Murphy Oil	1	9	3	0	2.15

APA presently has a consensus price target of $28.25, indicating a potential upside of 35.04%. Murphy Oil has a consensus price target of $34.92, indicating a potential upside of 22.74%. Given APA’s higher possible upside, analysts clearly believe APA is more favorable than Murphy Oil.

Summary

APA beats Murphy Oil on 11 of the 16 factors compared between the two stocks.

About APA

APA Corporation, an independent energy company, explores for, develops, and produces natural gas, crude oil, and natural gas liquids. It has oil and gas operations in the United States, Egypt, and North Sea. The company also has exploration and appraisal activities in Suriname, as well as holds interests in projects located in Uruguay and internationally. APA Corporation was incorporated in 1954 and is headquartered in Houston, Texas.

About Murphy Oil

Murphy Oil Corporation, together with its subsidiaries, operates as an oil and gas exploration and production company in the United States, Canada, and internationally. It explores for and produces crude oil, natural gas, and natural gas liquids. The company was formerly known as Murphy Corporation and changed its name to Murphy Oil Corporation in 1964. The company was incorporated in 1950 and is headquartered in Houston, Texas.