Vaalco Energy (NYSE:EGY – Get Free Report) and Sabine Royalty Trust (NYSE:SBR – Get Free Report) are both small-cap energy companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.
Risk and Volatility
Vaalco Energy has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500. Comparatively, Sabine Royalty Trust has a beta of 0.29, meaning that its share price is 71% less volatile than the S&P 500.
Dividends
Vaalco Energy pays an annual dividend of $0.25 per share and has a dividend yield of 4.3%. Sabine Royalty Trust pays an annual dividend of $3.98 per share and has a dividend yield of 5.5%. Vaalco Energy pays out -23.6% of its earnings in the form of a dividend. Sabine Royalty Trust pays out 81.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Vaalco Energy | 1 | 1 | 0 | 0 | 1.50 |
| Sabine Royalty Trust | 0 | 0 | 1 | 0 | 3.00 |
Vaalco Energy currently has a consensus price target of $7.30, suggesting a potential upside of 26.19%. Given Vaalco Energy’s higher probable upside, equities research analysts clearly believe Vaalco Energy is more favorable than Sabine Royalty Trust.
Profitability
This table compares Vaalco Energy and Sabine Royalty Trust’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Vaalco Energy | -31.11% | -14.36% | -6.41% |
| Sabine Royalty Trust | 94.90% | 961.80% | 839.84% |
Institutional and Insider Ownership
50.3% of Vaalco Energy shares are owned by institutional investors. Comparatively, 15.8% of Sabine Royalty Trust shares are owned by institutional investors. 3.0% of Vaalco Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Valuation & Earnings
This table compares Vaalco Energy and Sabine Royalty Trust”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Vaalco Energy | $359.27 million | 1.69 | -$41.39 million | ($1.06) | -5.46 |
| Sabine Royalty Trust | $77.53 million | 13.59 | $73.44 million | $4.90 | 14.74 |
Sabine Royalty Trust has lower revenue, but higher earnings than Vaalco Energy. Vaalco Energy is trading at a lower price-to-earnings ratio than Sabine Royalty Trust, indicating that it is currently the more affordable of the two stocks.
Summary
Sabine Royalty Trust beats Vaalco Energy on 11 of the 16 factors compared between the two stocks.
About Vaalco Energy
VAALCO Energy, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of crude oil, natural gas, and natural gas liquids in Gabon, Egypt, Equatorial Guinea, and Canada. The company holds 58.8% interest in the Etame production sharing contract related to the Etame Marin block covering an area of approximately 46,200 gross acres located offshore in the Republic of Gabon in West Africa. It also owns 100% interest in the Eastern Desert, which contains West Gharib, West Bakr and North West Gharib merged concessions covering as area of approximately 45,067 acres, as well as Western Desert, which contains the South Ghazalat concession covering as area of approximately 7,340 acres located in Egypt. In addition, the company production and working interests in Cardium light oil and Mannville liquids-rich gas assets covering as area of 47,400 gross acres located near the north of Calgary, Alberta; and an undeveloped block offshore Equatorial Guinea, West Africa. VAALCO Energy, Inc. was incorporated in 1985 and is headquartered in Houston, Texas.
About Sabine Royalty Trust
Sabine Royalty Trust holds royalty and mineral interests in various producing oil and gas properties in the United States. Its royalty and mineral interests include landowner's royalties, overriding royalty interests, minerals, production payments, and other similar non-participatory interest in certain producing and proved undeveloped oil and gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. Sabine Royalty Trust was founded in 1982 and is based in Dallas, Texas.
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