Critical Analysis: Natural Gas Services Group (NYSE:NGS) versus Seadrill (NYSE:SDRL)

Seadrill (NYSE:SDRL) and Natural Gas Services Group (NYSE:NGS) are both energy companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, dividends, analyst recommendations and valuation.

Earnings and Valuation

This table compares Seadrill and Natural Gas Services Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Seadrill	$1.53 billion	2.02	-$77.00 million	$0.03	1,652.37
Natural Gas Services Group	$172.32 million	2.78	$19.93 million	$1.61	23.03

Natural Gas Services Group has lower revenue, but higher earnings than Seadrill. Natural Gas Services Group is trading at a lower price-to-earnings ratio than Seadrill, indicating that it is currently the more affordable of the two stocks.

Dividends

Seadrill pays an annual dividend of $4.00 per share and has a dividend yield of 8.1%. Natural Gas Services Group pays an annual dividend of $0.60 per share and has a dividend yield of 1.6%. Seadrill pays out 13,333.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Natural Gas Services Group pays out 37.3% of its earnings in the form of a dividend.

Insider and Institutional Ownership

95.7% of Seadrill shares are owned by institutional investors. Comparatively, 65.6% of Natural Gas Services Group shares are owned by institutional investors. 0.5% of Seadrill shares are owned by insiders. Comparatively, 3.1% of Natural Gas Services Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Seadrill has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Natural Gas Services Group has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Seadrill and Natural Gas Services Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Seadrill	1	2	3	3	2.89
Natural Gas Services Group	0	1	3	0	2.75

Seadrill currently has a consensus price target of $59.40, suggesting a potential upside of 19.83%. Natural Gas Services Group has a consensus price target of $50.50, suggesting a potential upside of 36.19%. Given Natural Gas Services Group’s higher probable upside, analysts plainly believe Natural Gas Services Group is more favorable than Seadrill.

Profitability

This table compares Seadrill and Natural Gas Services Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Seadrill	0.07%	0.64%	0.46%
Natural Gas Services Group	10.81%	8.10%	3.70%

Summary

Natural Gas Services Group beats Seadrill on 9 of the 16 factors compared between the two stocks.

About Seadrill

Seadrill Ltd. engages in the provision of offshore drilling services to the oil and gas industry. It operates through the following segments: Floaters, Jack-up rigs, and Other. The Floaters segment encompasses drilling, completion, and maintenance of offshore exploration and production wells. the Jack-up Rigs segment includes drilling contracts relate to jack-up rigs for operations in harsh and benign environments in shallow water. The Other segment represents management services to third parties and related parties. The company was founded on May 10, 2005 and is headquartered in Hamilton, Bermuda.

About Natural Gas Services Group

Natural Gas Services Group, Inc. provides natural gas compression equipment and services to the energy industry in the United States. It engineers and fabricates, operates, rents, and maintains natural gas compressors for oil and natural gas production and plant facilities. It also designs, fabricates, and assembles compressor units for rental or sale; and designs, manufactures, and sells a line of reciprocating natural gas compressor frames, cylinders, and parts. In addition, the company offers flare stacks and related ignition and control devices for the onshore and offshore incineration of gas compounds, such as hydrogen sulfide, carbon dioxide, natural gas, and liquefied petroleum gases. Further, it provides aftermarket services for its compressor and flare sales business; and exchange and rebuild program for small horsepower screw compressors. It markets its products to exploration and production companies that utilize compressor units for artificial lift applications; and oil and natural gas exploration and production companies. Natural Gas Services Group, Inc. was incorporated in 1998 and is headquartered in Midland, Texas.