Epsilon Energy (NASDAQ:EPSN) vs. Diversified Energy (NYSE:DEC) Critical Survey

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Diversified Energy and Epsilon Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Diversified Energy	0	3	7	0	2.70
Epsilon Energy	0	1	0	0	2.00

Diversified Energy currently has a consensus price target of $22.50, suggesting a potential upside of 62.53%. Given Diversified Energy’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Diversified Energy is more favorable than Epsilon Energy.

Volatility & Risk

Diversified Energy has a beta of -0.28, meaning that its stock price is 128% less volatile than the S&P 500. Comparatively, Epsilon Energy has a beta of -0.06, meaning that its stock price is 106% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Diversified Energy	N/A	N/A	N/A
Epsilon Energy	-3.77%	5.56%	3.26%

Insider & Institutional Ownership

26.5% of Diversified Energy shares are owned by institutional investors. Comparatively, 60.3% of Epsilon Energy shares are owned by institutional investors. 2.9% of Diversified Energy shares are owned by company insiders. Comparatively, 28.4% of Epsilon Energy 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.

Dividends

Diversified Energy pays an annual dividend of $1.16 per share and has a dividend yield of 8.4%. Epsilon Energy pays an annual dividend of $0.25 per share and has a dividend yield of 4.2%. Diversified Energy pays out 35.9% of its earnings in the form of a dividend. Epsilon Energy pays out -119.0% 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.

Earnings & Valuation

This table compares Diversified Energy and Epsilon Energy”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Diversified Energy	$1.83 billion	0.54	$341.11 million	$3.23	4.29
Epsilon Energy	$51.59 million	3.49	-$5.80 million	($0.21)	-28.33

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

Summary

Diversified Energy beats Epsilon Energy on 9 of the 16 factors compared between the two stocks.

About Diversified Energy

Diversified Energy Company PLC operates as an independent owner and operator of producing natural gas and oil wells primarily in the Appalachian Basin of the United States. The company is involved in the production, marketing, and transportation of natural gas, natural gas liquids, crude oil, and condensates. Its assets consist of natural gas wells and gathering systems located in the states of Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania, Oklahoma, Texas, and Louisiana. The company was formerly known as Diversified Gas & Oil PLC and changed its name to Diversified Energy Company PLC in May 2021. Diversified Energy Company PLC was founded in 2001 and is headquartered in Birmingham, Alabama.

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.