Vaalco Energy (NYSE:EGY) & Permian Basin Royalty Trust (NYSE:PBT) Critical Analysis

Vaalco Energy (NYSE:EGY) and Permian Basin Royalty Trust (NYSE:PBT) are both small-cap energy companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, dividends, valuation and risk.

Dividends

Vaalco Energy pays an annual dividend of $0.25 per share and has a dividend yield of 4.1%. Permian Basin Royalty Trust pays an annual dividend of $0.23 per share and has a dividend yield of 0.7%. Vaalco Energy pays out -23.6% of its earnings in the form of a dividend. Permian Basin Royalty Trust pays out 65.7% 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. Vaalco Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

50.3% of Vaalco Energy shares are held by institutional investors. Comparatively, 28.9% of Permian Basin Royalty Trust shares are held by institutional investors. 3.0% of Vaalco Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Vaalco Energy and Permian Basin Royalty Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vaalco Energy	$419.87 million	1.51	-$41.39 million	($1.06)	-5.68
Permian Basin Royalty Trust	$17.69 million	92.09	$14.30 million	$0.35	99.89

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Vaalco Energy and Permian Basin Royalty Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vaalco Energy	1	1	0	0	1.50
Permian Basin Royalty Trust	0	1	0	0	2.00

Vaalco Energy currently has a consensus price target of $7.30, indicating a potential upside of 21.16%. Given Vaalco Energy’s higher possible upside, equities analysts clearly believe Vaalco Energy is more favorable than Permian Basin Royalty Trust.

Profitability

This table compares Vaalco Energy and Permian Basin Royalty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Vaalco Energy	-31.11%	-14.36%	-6.41%
Permian Basin Royalty Trust	91.96%	9,990.08%	510.19%

Volatility & Risk

Vaalco Energy has a beta of 0.24, meaning that its stock price is 76% less volatile than the S&P 500. Comparatively, Permian Basin Royalty Trust has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500.

Summary

Permian Basin Royalty Trust beats Vaalco Energy on 9 of the 15 factors compared between the two stocks.

About Vaalco Energy

VAALCO Energy, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids in Gabon, Egypt, Equatorial Guinea, and Canada. The company holds 58.8% interest in the Etame production sharing contract related to the Etame Marin block covering an area of approximately 46,200 gross acres located offshore in the Republic of Gabon in West Africa. It also owns 100% interest in the Eastern Desert, which contains West Gharib, West Bakr and North West Gharib merged concessions covering as area of approximately 45,067 acres, as well as Western Desert, which contains the South Ghazalat concession covering as area of approximately 7,340 acres located in Egypt. In addition, the company production and working interests in Cardium light oil and Mannville liquids-rich gas assets covering as area of 47,400 gross acres located near the north of Calgary, Alberta; and an undeveloped block offshore Equatorial Guinea, West Africa. VAALCO Energy, Inc. was incorporated in 1985 and is headquartered in Houston, Texas.

About Permian Basin Royalty Trust

Permian Basin Royalty Trust, an express trust, holds royalty interests in various oil and gas properties in the United States. The company holds a 75% net overriding royalty interest in the Waddell Ranch properties, including Dune, Sand Hills (Judkins), Sand Hills (McKnight), Sand Hills (Tubb), University-Waddell (Devonian) and Waddell fields in Crane County, Texas. It also holds a 95% net overriding royalty in the Texas Royalty properties, which consist of various producing oil fields, such as Yates, Wasson, Sand Hills, East Texas, Kelly-Snyder, Panhandle Regular, N. Cowden, Todd, Keystone, Kermit, McElroy, Howard-Glasscock, Seminole, and others located in Texas. Its Texas Royalty properties comprise approximately 125 separate royalty interests containing approximately 51,000 net producing acres. The company was founded in 1980 and is based in Dallas, Texas.