Critical Review: Gevo (NASDAQ:GEVO) vs. Permian Basin Royalty Trust (NYSE:PBT)

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

Insider & Institutional Ownership

35.2% of Gevo shares are owned by institutional investors. Comparatively, 28.9% of Permian Basin Royalty Trust shares are owned by institutional investors. 7.1% of Gevo shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Gevo and Permian Basin Royalty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gevo	1	3	2	0	2.17
Permian Basin Royalty Trust	0	1	0	0	2.00

Gevo currently has a consensus price target of $2.55, suggesting a potential upside of 99.22%. Given Gevo’s stronger consensus rating and higher possible upside, equities analysts plainly believe Gevo is more favorable than Permian Basin Royalty Trust.

Volatility & Risk

Gevo has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Permian Basin Royalty Trust has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gevo	-119.93%	-6.50%	-4.22%
Permian Basin Royalty Trust	91.96%	9,990.08%	510.19%

Earnings & Valuation

This table compares Gevo 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
Gevo	$177.51 million	1.78	-$33.84 million	($0.89)	-1.44
Permian Basin Royalty Trust	$16.13 million	103.01	$14.30 million	$0.35	101.85

Permian Basin Royalty Trust has lower revenue, but higher earnings than Gevo. Gevo 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.

About Gevo

Gevo, Inc. operates as a carbon abatement company. It operates through three segments: Gevo, Agri-Energy, and Renewable Natural Gas. The company focuses on transforming renewable energy into energy-dense liquid hydrocarbons that can be used as renewable fuels. It offers renewable gasoline and diesel, isobutanol, sustainable aviation fuel, renewable natural gas, isobutylene, ethanol, and animal feed and protein. The company was formerly known as Methanotech, Inc. and changed its name to Gevo, Inc. in March 2006. Gevo, Inc. was incorporated in 2005 and is headquartered in Englewood, Colorado.

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.