Critical Review: NACCO Industries (NYSE:NC) and North European Oil Royality Trust (NYSE:NRT)

North European Oil Royality Trust (NYSE:NRT) and NACCO Industries (NYSE:NC) are both small-cap energy companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Analyst Recommendations

This is a summary of current ratings for North European Oil Royality Trust and NACCO Industries, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
North European Oil Royality Trust	0	0	1	0	3.00
NACCO Industries	1	0	0	0	1.00

Profitability

This table compares North European Oil Royality Trust and NACCO Industries’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
North European Oil Royality Trust	91.06%	491.20%	222.05%
NACCO Industries	6.21%	4.00%	2.60%

Dividends

North European Oil Royality Trust pays an annual dividend of $1.04 per share and has a dividend yield of 12.3%. NACCO Industries pays an annual dividend of $1.05 per share and has a dividend yield of 2.9%. North European Oil Royality Trust pays out 102.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NACCO Industries pays out 45.7% of its earnings in the form of a dividend. NACCO Industries has raised its dividend for 1 consecutive years.

Valuation and Earnings

This table compares North European Oil Royality Trust and NACCO Industries”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
North European Oil Royality Trust	$10.29 million	7.53	$7.94 million	$1.02	8.27
NACCO Industries	$278.48 million	0.99	$17.57 million	$2.30	15.86

NACCO Industries has higher revenue and earnings than North European Oil Royality Trust. North European Oil Royality Trust is trading at a lower price-to-earnings ratio than NACCO Industries, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

7.0% of North European Oil Royality Trust shares are owned by institutional investors. Comparatively, 49.1% of NACCO Industries shares are owned by institutional investors. 3.5% of North European Oil Royality Trust shares are owned by company insiders. Comparatively, 44.8% of NACCO Industries shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

North European Oil Royality Trust has a beta of 0.18, meaning that its share price is 82% less volatile than the S&P 500. Comparatively, NACCO Industries has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Summary

NACCO Industries beats North European Oil Royality Trust on 9 of the 16 factors compared between the two stocks.

About North European Oil Royality Trust

North European Oil Royalty Trust, a grantor trust, holds overriding royalty rights covering gas and oil production in various concessions or leases in the Federal Republic of Germany. The company also has rights under contracts with German exploration and development subsidiaries of ExxonMobil Corp. and the Royal Dutch/Shell Group of Companies. In addition, it holds royalties for the sale of gas well gas, oil well gas, crude oil, condensate, and sulfur. North European Oil Royalty Trust was founded in 1975 and is based in Keene, New Hampshire.

About NACCO Industries

NACCO Industries, Inc., together with its subsidiaries, engages in the natural resources business. The company operates through three segments: Coal Mining, North American Mining, and Minerals Management. The Coal Mining segment operates surface coal mines under long-term contracts with power generation companies. Coal is surface mined in North Dakota and Mississippi. The North American Mining segment provides value-added contract mining and other services for producers of aggregates, activated carbon, lithium, and other industrial minerals; and contract mining services for independently owned mines and quarries in Florida, Texas, Arkansas, Virginia, and Nebraska. This segment also offers mining design and consulting services. The Minerals Management segment is involved in the leasing of its royalty and mineral interests to third-party exploration and production companies, and other mining companies, which grants them the rights to explore, develop, mine, produce, market, and sell gas, oil, and coal. NACCO Industries, Inc. was founded in 1913 and is headquartered in Cleveland, Ohio.