Comparing Permian Basin Royalty Trust (NYSE:PBT) & W&T Offshore (NYSE:WTI)

W&T Offshore (NYSE:WTI) and Permian Basin Royalty Trust (NYSE:PBT) are both small-cap energy companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, earnings, dividends, analyst recommendations, risk, valuation and institutional ownership.

Dividends

W&T Offshore pays an annual dividend of $0.04 per share and has a dividend yield of 1.1%. Permian Basin Royalty Trust pays an annual dividend of $0.24 per share and has a dividend yield of 0.7%. W&T Offshore pays out -5.5% of its earnings in the form of a dividend. Permian Basin Royalty Trust pays out 68.6% 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. W&T Offshore is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

W&T Offshore has a beta of 0.35, suggesting that its share price is 65% less volatile than the S&P 500. Comparatively, Permian Basin Royalty Trust has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.

Institutional & Insider Ownership

42.9% of W&T Offshore shares are held by institutional investors. Comparatively, 28.9% of Permian Basin Royalty Trust shares are held by institutional investors. 35.9% of W&T Offshore shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares W&T Offshore and Permian Basin Royalty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
W&T Offshore	-19.32%	N/A	-2.59%
Permian Basin Royalty Trust	91.96%	9,990.08%	510.19%

Analyst Recommendations

This is a breakdown of current ratings for W&T Offshore and Permian Basin Royalty Trust, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
W&T Offshore	1	1	1	0	2.00
Permian Basin Royalty Trust	0	1	0	0	2.00

W&T Offshore currently has a consensus target price of $4.25, indicating a potential upside of 16.28%. Given W&T Offshore’s higher probable upside, equities research analysts clearly believe W&T Offshore is more favorable than Permian Basin Royalty Trust.

Valuation and Earnings

This table compares W&T Offshore and Permian Basin Royalty Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
W&T Offshore	$501.46 million	1.10	-$150.06 million	($0.73)	-5.01
Permian Basin Royalty Trust	$16.13 million	100.07	$14.30 million	$0.35	98.94

Permian Basin Royalty Trust has lower revenue, but higher earnings than W&T Offshore. W&T Offshore 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.

Summary

Permian Basin Royalty Trust beats W&T Offshore on 8 of the 15 factors compared between the two stocks.

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.

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.