Kosmos Energy (NYSE:KOS) & Talos Energy (NYSE:TALO) Critical Analysis

Talos Energy (NYSE:TALO) and Kosmos Energy (NYSE:KOS) are both small-cap oils/energy companies, but which is the better business? We will compare the two businesses based on the strength of their risk, analyst recommendations, earnings, dividends, profitability, institutional ownership and valuation.

Profitability

This table compares Talos Energy and Kosmos Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Talos Energy	3.95%	-1.98%	-0.86%
Kosmos Energy	12.21%	31.08%	6.53%

Risk & Volatility

Talos Energy has a beta of 1.79, indicating that its stock price is 79% more volatile than the S&P 500. Comparatively, Kosmos Energy has a beta of 2.31, indicating that its stock price is 131% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Talos Energy and Kosmos Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Talos Energy	0	2	7	0	2.78
Kosmos Energy	0	3	2	0	2.40

Talos Energy currently has a consensus price target of $15.56, indicating a potential upside of 81.41%. Kosmos Energy has a consensus price target of $5.52, indicating a potential upside of 148.09%. Given Kosmos Energy’s higher possible upside, analysts plainly believe Kosmos Energy is more favorable than Talos Energy.

Insider and Institutional Ownership

89.3% of Talos Energy shares are owned by institutional investors. Comparatively, 95.3% of Kosmos Energy shares are owned by institutional investors. 0.8% of Talos Energy shares are owned by company insiders. Comparatively, 2.0% of Kosmos Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Talos Energy and Kosmos Energy”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Talos Energy	$1.97 billion	0.78	$187.33 million	($0.51)	-16.81
Kosmos Energy	$1.68 billion	0.63	$213.52 million	$0.39	5.71

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

Summary

Kosmos Energy beats Talos Energy on 9 of the 14 factors compared between the two stocks.

About Talos Energy

Talos Energy Inc., through its subsidiaries, engages in the exploration and production of oil, natural gas, and natural gas liquids in the United States and Mexico. It also engages in the development of carbon capture and sequestration. Talos Energy Inc. was founded in 2011 and is headquartered in Houston, Texas.

About Kosmos Energy

Kosmos Energy Ltd., together with its subsidiaries, engages in the exploration, development, and production of oil and gas along the Atlantic Margins in the United States. The company’s primary assets include production projects located in offshore Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico, as well as gas projects located in offshore Mauritania and Senegal. It undertakes a proven basin exploration program in Equatorial Guinea and the U.S. Gulf of Mexico. Kosmos Energy Ltd. was founded in 2003 and is headquartered in Dallas, Texas.