Contrasting Dorchester Minerals (NASDAQ:DMLP) & Epsilon Energy (NASDAQ:EPSN)

Epsilon Energy (NASDAQ:EPSN) and Dorchester Minerals (NASDAQ:DMLP) are both small-cap energy companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, dividends and risk.

Institutional & Insider Ownership

60.3% of Epsilon Energy shares are held by institutional investors. Comparatively, 19.2% of Dorchester Minerals shares are held by institutional investors. 28.4% of Epsilon Energy shares are held by company insiders. Comparatively, 5.9% of Dorchester Minerals shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Epsilon Energy and Dorchester Minerals”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Epsilon Energy	$51.59 million	3.10	-$5.80 million	($0.21)	-25.19
Dorchester Minerals	$152.83 million	9.23	$55.25 million	$2.07	13.54

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

Analyst Recommendations

This is a summary of recent ratings and price targets for Epsilon Energy and Dorchester Minerals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Epsilon Energy	0	1	0	0	2.00
Dorchester Minerals	0	1	0	0	2.00

Dividends

Epsilon Energy pays an annual dividend of $0.25 per share and has a dividend yield of 4.7%. Dorchester Minerals pays an annual dividend of $3.53 per share and has a dividend yield of 12.6%. Epsilon Energy pays out -119.0% of its earnings in the form of a dividend. Dorchester Minerals pays out 170.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Epsilon Energy and Dorchester Minerals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Epsilon Energy	-3.77%	5.56%	3.26%
Dorchester Minerals	49.84%	34.73%	33.86%

Summary

Dorchester Minerals beats Epsilon Energy on 9 of the 12 factors compared between the two stocks.

About Epsilon Energy

Epsilon Energy Ltd. (NASDAQ: EPSN) is an independent energy company engaged in the acquisition, development, exploration and production of oil and natural gas assets in North America. Its operations are focused primarily on unconventional resource plays and related midstream infrastructure. The company’s principal asset base is associated with the Marcellus Shale in northeastern Pennsylvania, where Epsilon holds interests in natural gas wells and gathering systems. These assets provide exposure to natural gas production and infrastructure serving regional energy markets.

About Dorchester Minerals

Dorchester Minerals, L.P. is a publicly traded limited partnership that owns oil and natural gas mineral and royalty interests. The partnership also holds overriding royalty and net profits interests in producing and undeveloped properties. Dorchester generally does not drill or operate wells. Instead, it leases its mineral interests to exploration and production companies, which develop the properties; Dorchester receives royalties and other payments tied to production and applicable agreements.