Kimbell Royalty Partners (NYSE:KRP) and SM Energy (NYSE:SM) are both small-cap oils/energy companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, risk, earnings and institutional ownership.
Dividends
Kimbell Royalty Partners pays an annual dividend of $0.76 per share and has a dividend yield of 7.3%. SM Energy pays an annual dividend of $0.02 per share and has a dividend yield of 0.1%. Kimbell Royalty Partners pays out 22.6% of its earnings in the form of a dividend. SM Energy pays out -4.2% 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. Kimbell Royalty Partners has increased its dividend for 1 consecutive years. Kimbell Royalty Partners is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Kimbell Royalty Partners and SM Energy's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Kimbell Royalty Partners | -165.60% | 3.85% | 2.78% |
| SM Energy | -55.76% | -1.40% | -0.60% |
Insider & Institutional Ownership
22.7% of Kimbell Royalty Partners shares are held by institutional investors. Comparatively, 68.9% of SM Energy shares are held by institutional investors. 14.2% of Kimbell Royalty Partners shares are held by company insiders. Comparatively, 1.2% of SM Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Volatility and Risk
Kimbell Royalty Partners has a beta of 2.14, meaning that its share price is 114% more volatile than the S&P 500. Comparatively, SM Energy has a beta of 6.6, meaning that its share price is 560% more volatile than the S&P 500.
Earnings and Valuation
This table compares Kimbell Royalty Partners and SM Energy's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Kimbell Royalty Partners | $108.22 million | 5.71 | $-69,060,000.00 | $3.37 | 3.07 |
| SM Energy | $1.59 billion | 1.00 | $-187,000,000.00 | ($0.48) | -28.79 |
Kimbell Royalty Partners has higher earnings, but lower revenue than SM Energy. SM Energy is trading at a lower price-to-earnings ratio than Kimbell Royalty Partners, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent recommendations for Kimbell Royalty Partners and SM Energy, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Kimbell Royalty Partners | 0 | 1 | 6 | 1 | 3.00 |
| SM Energy | 2 | 9 | 6 | 0 | 2.24 |
Kimbell Royalty Partners currently has a consensus price target of $10.8750, indicating a potential upside of 5.07%. SM Energy has a consensus price target of $6.7857, indicating a potential downside of 50.90%. Given Kimbell Royalty Partners' stronger consensus rating and higher possible upside, equities analysts plainly believe Kimbell Royalty Partners is more favorable than SM Energy.
Summary
Kimbell Royalty Partners beats SM Energy on 12 of the 17 factors compared between the two stocks.
