Reviewing Diversified Energy (NYSE:DEC) & Meren Energy (OTCMKTS:AOIFF)

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

Institutional & Insider Ownership

26.5% of Diversified Energy shares are owned by institutional investors. 1.0% of Meren Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Meren Energy and Diversified Energy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meren Energy	N/A	N/A	-$279.10 million	($0.52)	-2.43
Diversified Energy	$794.84 million	N/A	-$88.27 million	$1.47	9.34

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

Risk & Volatility

Meren Energy has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500. Comparatively, Diversified Energy has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Profitability

This table compares Meren Energy and Diversified Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meren Energy	N/A	3.52%	1.68%
Diversified Energy	N/A	N/A	N/A

Dividends

Meren Energy pays an annual dividend of $0.14 per share and has a dividend yield of 11.1%. Diversified Energy pays an annual dividend of $1.16 per share and has a dividend yield of 8.4%. Meren Energy pays out -26.9% of its earnings in the form of a dividend. Diversified Energy pays out 78.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Meren Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and target prices for Meren Energy and Diversified Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meren Energy	0	0	0	1	4.00
Diversified Energy	1	0	6	0	2.71

Diversified Energy has a consensus target price of $22.20, indicating a potential upside of 61.69%. Given Diversified Energy’s higher probable upside, analysts clearly believe Diversified Energy is more favorable than Meren Energy.

Summary

Meren Energy beats Diversified Energy on 8 of the 15 factors compared between the two stocks.

About Meren Energy

Africa Oil Corp., together with its subsidiaries, operates as an oil and gas exploration and production company in Kenya, Nigeria, and South Africa. The company holds interests in producing and development assets in deep-water Nigeria, and development assets in Kenya. It also has a portfolio of exploration and appraisal assets in Namibia, Nigeria, South Africa, and Kenya, as well as Guyana and Senegal Guinea Bissau Joint Development Zone. The company was formerly known as Canmex Minerals Corporation and changed its name to Africa Oil Corp. in August 2007. Africa Oil Corp. was incorporated in 1983 and is headquartered in Vancouver, Canada.

About Diversified Energy

Diversified Energy Company PLC operates as an independent owner and operator of producing natural gas and oil wells primarily in the Appalachian Basin of the United States. The company is involved in the production, marketing, and transportation of natural gas, natural gas liquids, crude oil, and condensates. Its assets consist of natural gas wells and gathering systems located in the states of Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania, Oklahoma, Texas, and Louisiana. The company was formerly known as Diversified Gas & Oil PLC and changed its name to Diversified Energy Company PLC in May 2021. Diversified Energy Company PLC was founded in 2001 and is headquartered in Birmingham, Alabama.