Financial Analysis: Dorchester Minerals (NASDAQ:DMLP) & W&T Offshore (NYSE:WTI)

Dorchester Minerals (NASDAQ:DMLP) and W&T Offshore (NYSE:WTI) are both small-cap energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, dividends, analyst recommendations and profitability.

Analyst Recommendations

This is a breakdown of current ratings for Dorchester Minerals and W&T Offshore, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dorchester Minerals	0	1	0	0	2.00
W&T Offshore	1	0	1	1	2.67

W&T Offshore has a consensus target price of $4.25, suggesting a potential upside of 32.61%. Given W&T Offshore’s stronger consensus rating and higher possible upside, analysts plainly believe W&T Offshore is more favorable than Dorchester Minerals.

Volatility and Risk

Dorchester Minerals has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, W&T Offshore has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Profitability

This table compares Dorchester Minerals and W&T Offshore’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Dorchester Minerals	45.45%	28.43%	27.83%
W&T Offshore	-8.44%	N/A	-1.72%

Valuation & Earnings

This table compares Dorchester Minerals and W&T Offshore”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dorchester Minerals	$152.83 million	8.93	$55.25 million	$1.76	15.80
W&T Offshore	$501.46 million	0.99	-$150.06 million	($0.34)	-9.43

Dorchester Minerals has higher earnings, but lower revenue than W&T Offshore. W&T Offshore is trading at a lower price-to-earnings ratio than Dorchester Minerals, indicating that it is currently the more affordable of the two stocks.

Dividends

Dorchester Minerals pays an annual dividend of $3.53 per share and has a dividend yield of 12.7%. W&T Offshore pays an annual dividend of $0.04 per share and has a dividend yield of 1.2%. Dorchester Minerals pays out 200.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. W&T Offshore pays out -11.8% of its earnings in the form of a dividend.

Institutional and Insider Ownership

19.2% of Dorchester Minerals shares are owned by institutional investors. Comparatively, 42.9% of W&T Offshore shares are owned by institutional investors. 5.9% of Dorchester Minerals shares are owned by insiders. Comparatively, 35.9% of W&T Offshore shares are owned by 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.

Summary

Dorchester Minerals beats W&T Offshore on 9 of the 17 factors compared between the two stocks.

About Dorchester Minerals

Dorchester Minerals, L.P. engages in the acquisition, ownership, and administration of royalty properties in the United States. Its royalty properties include producing and nonproducing mineral, royalty, overriding royalty, net profits, and leasehold interests in 593 counties and parishes in 28 states; and net profits interests represent net profits overriding royalty interests in various properties owned by the operating partnership. Dorchester Minerals Management LP serves as the general partner of Dorchester Minerals, L.P. The company was founded in 1982 and is based in Dallas, Texas.

About W&T Offshore

W&T Offshore, Inc. engages in the production, exploration, development, and acquisition of oil and natural gas properties. It focuses its operations in the Gulf of Mexico. The company was founded by Tracy W. Krohn in 1983 and is headquartered in Houston, TX.