Financial Contrast: Epsilon Energy (NASDAQ:EPSN) & PermRock Royalty Trust (NYSE:PRT)

Epsilon Energy (NASDAQ:EPSN) and PermRock Royalty Trust (NYSE:PRT) are both small-cap energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, profitability, risk and dividends.

Profitability

This table compares Epsilon Energy and PermRock Royalty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Epsilon Energy	11.75%	6.71%	5.39%
PermRock Royalty Trust	84.81%	7.46%	7.31%

Dividends

Epsilon Energy pays an annual dividend of $0.25 per share and has a dividend yield of 5.5%. PermRock Royalty Trust pays an annual dividend of $0.37 per share and has a dividend yield of 9.5%. Epsilon Energy pays out 104.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PermRock Royalty Trust pays out 84.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PermRock Royalty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

60.3% of Epsilon Energy shares are held by institutional investors. Comparatively, 41.7% of PermRock Royalty Trust shares are held by institutional investors. 7.1% of Epsilon Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and price targets for Epsilon Energy and PermRock Royalty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Epsilon Energy	0	1	0	0	2.00
PermRock Royalty Trust	0	0	0	0	0.00

Epsilon Energy currently has a consensus price target of $8.40, suggesting a potential upside of 85.02%. Given Epsilon Energy’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Epsilon Energy is more favorable than PermRock Royalty Trust.

Volatility and Risk

Epsilon Energy has a beta of 0.04, meaning that its stock price is 96% less volatile than the S&P 500. Comparatively, PermRock Royalty Trust has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Valuation and Earnings

This table compares Epsilon Energy and PermRock Royalty Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Epsilon Energy	$44.02 million	2.28	$1.93 million	$0.24	18.92
PermRock Royalty Trust	$6.31 million	7.50	$5.16 million	$0.44	8.85

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

Summary

PermRock Royalty Trust beats Epsilon Energy on 9 of the 15 factors compared between the two stocks.

About Epsilon Energy

Epsilon Energy Ltd., a North American onshore independent natural gas and oil company, engages in the acquisition, development, gathering, and production of natural oil and gas reserves in the United States. The company operates through Upstream and Gathering System segments. It has natural gas production in the Marcellus Shale in Pennsylvania; and oil, natural gas liquids, and natural gas production in the Permian Basin in Texas and New Mexico, and Anadarko Basin in Oklahoma. Epsilon Energy Ltd. was incorporated in 2005 and is based in Calgary, Canada.

About PermRock Royalty Trust

PermRock Royalty Trust operates as a statutory trust. It owns interests in the oil and natural gas producing properties. The company's underlying properties include 22,394 net acres in the Permian Basin. The company was founded in 2017 and is based in Dallas, Texas.