Critical Survey: Paramount Resources (OTCMKTS:PRMRF) & Kimbell Royalty (NYSE:KRP)

Paramount Resources (OTCMKTS:PRMRF) and Kimbell Royalty (NYSE:KRP) are both energy companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Analyst Ratings

This is a breakdown of current recommendations for Paramount Resources and Kimbell Royalty, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paramount Resources	0	2	4	2	3.00
Kimbell Royalty	0	1	4	1	3.00

Kimbell Royalty has a consensus target price of $18.25, indicating a potential upside of 7.42%. Given Kimbell Royalty’s higher probable upside, analysts clearly believe Kimbell Royalty is more favorable than Paramount Resources.

Dividends

Paramount Resources pays an annual dividend of $0.42 per share and has a dividend yield of 1.7%. Kimbell Royalty pays an annual dividend of $1.88 per share and has a dividend yield of 11.1%. Paramount Resources pays out 73.7% of its earnings in the form of a dividend. Kimbell Royalty pays out 223.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

Paramount Resources has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Kimbell Royalty has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500.

Earnings and Valuation

This table compares Paramount Resources and Kimbell Royalty”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paramount Resources	$692.73 million	5.25	$922.32 million	$0.57	43.65
Kimbell Royalty	$333.83 million	5.84	$90.95 million	$0.84	20.23

Paramount Resources has higher revenue and earnings than Kimbell Royalty. Kimbell Royalty is trading at a lower price-to-earnings ratio than Paramount Resources, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Paramount Resources and Kimbell Royalty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Paramount Resources	12.52%	4.31%	3.20%
Kimbell Royalty	27.17%	14.95%	7.41%

Insider & Institutional Ownership

4.1% of Paramount Resources shares are held by institutional investors. Comparatively, 25.8% of Kimbell Royalty shares are held by institutional investors. 36.3% of Paramount Resources shares are held by insiders. Comparatively, 5.6% of Kimbell Royalty shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Kimbell Royalty beats Paramount Resources on 8 of the 15 factors compared between the two stocks.

About Paramount Resources

Paramount Resources Ltd. explores for and develops conventional and unconventional petroleum and natural gas reserves and resources in Canada. The company holds interests in the Karr and Wapiti Montney properties covering an area of 109,000 net acres located south of the city of Grande Prairie, Alberta; Kaybob North Duvernay development and natural gas producing properties covering an area of 124,000 net acres located in west-central Alberta; and Willesden Green Duvernay development in central Alberta and shale gas producing properties in the Horn River Basin in northeast British Columbia covering an area of 249,000 net acres. The company was founded in 1976 and is based in Calgary, Canada.

About Kimbell Royalty

Kimbell Royalty Partners, LP, together with its subsidiaries, engages in acquiring and owning mineral and royalty interests in oil and natural gas properties in the United States. It serves as the general partner of the company. The company was incorporated in 2015 and is based in Fort Worth, Texas.