Falcon Minerals (NASDAQ:FLMN) and Legacy Reserves (NASDAQ:LGCY) are both small-cap oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, dividends and valuation.
Falcon Minerals pays an annual dividend of $0.70 per share and has a dividend yield of 8.9%. Legacy Reserves does not pay a dividend. Falcon Minerals pays out 350.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Legacy Reserves has increased its dividend for 8 consecutive years.
This table compares Falcon Minerals and Legacy Reserves’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
65.4% of Falcon Minerals shares are held by institutional investors. Comparatively, 42.8% of Legacy Reserves shares are held by institutional investors. 15.8% of Falcon Minerals shares are held by insiders. Comparatively, 0.8% of Legacy Reserves shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This is a breakdown of recent ratings and target prices for Falcon Minerals and Legacy Reserves, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Falcon Minerals presently has a consensus price target of $10.09, suggesting a potential upside of 28.76%. Given Falcon Minerals’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Falcon Minerals is more favorable than Legacy Reserves.
Risk and Volatility
Falcon Minerals has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, Legacy Reserves has a beta of 2.14, suggesting that its share price is 114% more volatile than the S&P 500.
Earnings and Valuation
This table compares Falcon Minerals and Legacy Reserves’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Falcon Minerals||$97.20 million||6.93||$90.13 million||$0.20||39.20|
|Legacy Reserves||$554.86 million||0.01||$43.83 million||$0.18||0.22|
Falcon Minerals has higher earnings, but lower revenue than Legacy Reserves. Legacy Reserves is trading at a lower price-to-earnings ratio than Falcon Minerals, indicating that it is currently the more affordable of the two stocks.
Falcon Minerals beats Legacy Reserves on 13 of the 17 factors compared between the two stocks.
About Falcon Minerals
Falcon Minerals Corporation acquires and owns mineral, royalty, and over-riding royalty interests in oil and natural gas properties in North America. It owns interests covering approximately 256,000 gross unit acres in the Eagle Ford Shale and Austin Chalk in Karnes, DeWitt, and Gonzales Counties in Texas, as well as approximately 68,000 gross unit acres in Pennsylvania, Ohio, and West Virginia that is prospective for the Marcellus Shale. The company is based in Philadelphia, Pennsylvania.
About Legacy Reserves
Legacy Reserves Inc., an independent energy company, engages in the acquisition, development, and production of oil and natural gas properties in the United States. It focuses on the horizontal development of unconventional plays in the Permian Basin and the management of shallow-decline oil and natural gas wells in the regions of Permian Basin, East Texas, Rocky Mountain, and Mid-Continent. As of December 31, 2018, the company had proved reserves of approximately 164.9 million barrels of crude oil equivalent covering natural gas, as well as oil and natural gas liquids. Legacy Reserves Inc. was founded in 2005 and is based in Midland, Texas.
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