A Hess Corp. (HES) Board Member Has Been Buying Stock

We would note that this earnings multiple, while low in absolute terms, is actually on the high side of the range where we find larger oil and gas companies. Hess Corp. (NYSE:HES) trades evenly with supermajor Exxon Mobil Corporation (NYSE:XOM) on a forward basis; we suppose that it has been doing better than its larger peers, as Exxon Mobil Corporation (NYSE:XOM) recorded a 13% decline in revenue last quarter compared to the first quarter of 2012. Chevron Corporation (NYSE:CVX) and ConocoPhillips (NYSE:COP) carry forward P/Es in the 9-10 range, and each of these peers saw weaker results on both top and bottom lines during this year’s Q1. We’d note that ConocoPhillips (NYSE:COP) does pay a dividend yield of 4.4% at current prices. Among the cheapest large oil companies in terms of forward earnings estimates- as well as offering an even higher yield, at 5.2%- is BP plc (ADR) (NYSE:BP). The forward P/E of 7 is certainly quite cheap, suggesting that the company still faces poor sentiment in the market (as well as, we suppose, continued legal risks).

As a result we’d say that Hess Corp. (NYSE:HES) does have to realize considerable efficiencies from the aftermath of its divestments in order to justify where it is valued compared to larger (and, possibly, more stable) oil companies. We wouldn’t rule out this outcome, but potential investors in Hess should know that they are depending on it. We’d also suggest that investors take a closer look at BP and how much special risks remain at the company, given its sizable discount to its peers on a forward earnings basis and its superior dividend yield.

Disclosure: I own no shares of any stocks mentioned in this article.