Parsley Energy (NYSE: PE) and SandRidge Permian Trust (NYSE:PER) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.
Volatility and Risk
Parsley Energy has a beta of -0.09, indicating that its stock price is 109% less volatile than the S&P 500. Comparatively, SandRidge Permian Trust has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.
Institutional and Insider Ownership
91.1% of Parsley Energy shares are owned by institutional investors. Comparatively, 5.3% of SandRidge Permian Trust shares are owned by institutional investors. 15.5% of Parsley Energy shares are owned by company insiders. Comparatively, 29.0% of SandRidge Permian Trust shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
SandRidge Permian Trust pays an annual dividend of $0.48 per share and has a dividend yield of 16.6%. Parsley Energy does not pay a dividend. SandRidge Permian Trust pays out 96.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares Parsley Energy and SandRidge Permian Trust’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|SandRidge Permian Trust||88.64%||19.14%||19.14%|
Earnings & Valuation
This table compares Parsley Energy and SandRidge Permian Trust’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Parsley Energy||$702.95 million||8.89||$501.07 million||$0.11||230.45|
|SandRidge Permian Trust||$29.19 million||5.22||$26.25 million||$0.50||5.80|
Parsley Energy has higher revenue and earnings than SandRidge Permian Trust. SandRidge Permian Trust is trading at a lower price-to-earnings ratio than Parsley Energy, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for Parsley Energy and SandRidge Permian Trust, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|SandRidge Permian Trust||0||0||1||0||3.00|
Parsley Energy currently has a consensus price target of $40.54, indicating a potential upside of 59.93%. Given Parsley Energy’s higher probable upside, research analysts clearly believe Parsley Energy is more favorable than SandRidge Permian Trust.
About Parsley Energy
Parsley Energy, Inc. is a holding company. The Company is an independent oil and natural gas company. The Company focuses on the acquisition, development and exploitation of unconventional oil and natural gas reserves in the Permian Basin. The Permian Basin is located in West Texas and Southeastern New Mexico and includes three primary sub-areas: the Midland Basin, the Central Basin Platform and the Delaware Basin. The Company’s properties are primarily located in the Midland and Delaware Basins, where it focuses on horizontal development drilling and target various stacked pay intervals in the Spraberry, Wolfcamp, Upper Pennsylvanian (Cline) and Atoka shales. As of December 31, 2016, it had an average working interest of 87% in 166 gross (146.7 net) horizontal wells, of which 151 gross (132.4 net) are in the Midland Basin. As of December 31, 2016, the Company operated seven horizontal rigs and three vertical drilling rigs.
About SandRidge Permian Trust
Sandridge Permian Trust (the Trust) is a statutory trust. The Trust holds Royalty Interests in specified oil and natural gas properties in the Permian Basin located in Andrews County, Texas. The Trust’s business activities are generally limited to owning the Royalty Interests, and entering into hedging arrangements at the inception of the Trust and activities related thereto, including activities required or permitted by the terms of the conveyances related to the Royalty Interests. The Trust’s properties consist of Royalty Interests in the initial wells and over 860 additional wells that are drilled and perforated for completion. The Royalty Interests are in properties located in the greater Fuhrman-Mascho field, a field in Andrews County, Texas that produces oil primarily from the Grayburg/San Andres formation in the Permian Basin. The Permian Basin extends throughout southwestern Texas and southeastern New Mexico over an area approximately 250 miles wide and over 300 miles long.
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