Head to Head Analysis: Cosan (NYSE:CSAN) and Meren Energy (OTCMKTS:AOIFF)

Cosan (NYSE:CSAN) and Meren Energy (OTCMKTS:AOIFF) are both energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Volatility and Risk

Cosan has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.Comparatively, Meren Energy has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cosan	-28.08%	-27.61%	-8.25%
Meren Energy	N/A	3.52%	1.68%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cosan	$43.55 billion	0.05	-$1.75 billion	($0.91)	-5.59
Meren Energy	N/A	N/A	-$279.10 million	($0.52)	-2.48

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

Dividends

Cosan pays an annual dividend of $0.31 per share and has a dividend yield of 6.1%. Meren Energy pays an annual dividend of $0.14 per share and has a dividend yield of 10.9%. Cosan pays out -34.1% of its earnings in the form of a dividend. Meren Energy pays out -26.9% 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.

Analyst Recommendations

This is a summary of current recommendations for Cosan and Meren Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cosan	2	2	1	0	1.80
Meren Energy	0	0	0	1	4.00

Cosan presently has a consensus price target of $9.47, indicating a potential upside of 86.17%. Given Cosan’s higher probable upside, equities research analysts clearly believe Cosan is more favorable than Meren Energy.

Summary

Meren Energy beats Cosan on 9 of the 14 factors compared between the two stocks.

About Cosan

Cosan S.A. engages in the fuel distribution business. It operates through Raízen, Compass, Moove, Rumo, and Radar segments. The company’s Raízen segment engages in the production, commercialization, origination, and trading of ethanol, bioenergy, renewable sources, and sugar; trading and resale of electricity; and distribution and commercialization of fuels and lubricants. Its Compass segment distributes piped natural gas to industrial, residential, commercial, automotive, and cogeneration customers; and develops infrastructure projects in a regasification terminal, offshore gas pipeline, and thermal generation projects utilizing natural gas, as well as commercialization of electricity and natural gas. The company’s Moove segment produces and distributes lubricants under the Comma brand. Its Rumo segment provides logistics services for rail transportation, port storage, and loading of goods, including grains and sugar; and leases locomotives, wagons, and another railroad equipment, as well as operates containers. The company’s Radar segment manages agricultural property. It operates in Brazil, England, France, Spain and Portugal, Argentina, Bolivia, Uruguay and Paraguay, the United States, Asia, and internationally. Cosan S.A. was founded in 1936 and is headquartered in São Paulo, Brazil.

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.