San Juan Basin Royalty Trust (NYSE: SJT) and Cimarex Energy (NYSE:XEC) are both oils/energy companies, but which is the better business? We will compare the two companies based on the strength of their valuation, institutional ownership, analyst recommendations, risk, profitability, dividends and earnings.

Dividends

San Juan Basin Royalty Trust pays an annual dividend of $0.87 per share and has a dividend yield of 11.6%. Cimarex Energy pays an annual dividend of $0.32 per share and has a dividend yield of 0.3%. San Juan Basin Royalty Trust pays out 158.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cimarex Energy pays out 12.0% of its earnings in the form of a dividend. Cimarex Energy has raised its dividend for 3 consecutive years.

Risk & Volatility

San Juan Basin Royalty Trust has a beta of -0.43, indicating that its stock price is 143% less volatile than the S&P 500. Comparatively, Cimarex Energy has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500.

Earnings and Valuation

This table compares San Juan Basin Royalty Trust and Cimarex Energy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
San Juan Basin Royalty Trust $28.01 million 12.53 $25.63 million $0.55 13.69
Cimarex Energy $1.62 billion 6.74 $1.02 billion $2.66 43.96

Cimarex Energy has higher revenue and earnings than San Juan Basin Royalty Trust. San Juan Basin Royalty Trust is trading at a lower price-to-earnings ratio than Cimarex Energy, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

27.1% of San Juan Basin Royalty Trust shares are owned by institutional investors. Comparatively, 90.8% of Cimarex Energy shares are owned by institutional investors. 1.7% of Cimarex Energy shares are owned by company 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 San Juan Basin Royalty Trust and Cimarex Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
San Juan Basin Royalty Trust 92.24% 337.99% 232.21%
Cimarex Energy 15.64% 13.29% 6.67%

Analyst Recommendations

This is a summary of current ratings and recommmendations for San Juan Basin Royalty Trust and Cimarex Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
San Juan Basin Royalty Trust 0 0 0 0 N/A
Cimarex Energy 1 8 16 0 2.60

Cimarex Energy has a consensus price target of $136.29, indicating a potential upside of 16.55%. Given Cimarex Energy’s higher probable upside, analysts plainly believe Cimarex Energy is more favorable than San Juan Basin Royalty Trust.

Summary

Cimarex Energy beats San Juan Basin Royalty Trust on 11 of the 16 factors compared between the two stocks.

About San Juan Basin Royalty Trust

San Juan Basin Royalty Trust is an express trust. The principal asset of the Trust is Royalty. Its Royalty is carved from working, royalty and other oil and natural gas interests owned by Southland Royalty Company, the predecessor to Burlington Resources Oil & Gas Company LP (Burlington), in properties located in the San Juan Basin of northwestern New Mexico (Subject Interests). The Trustee of the Trust is Compass Bank. The function of the Trustee is to collect the net proceeds attributable to the Royalty, to pay all expenses and charges of the Trust and distribute the remaining available income to the Unit Holders. The Trust does not operate the Subject Interests and is not empowered to carry on any business activity. It is a widely held fixed investment trust (WHFIT) and is classified as a non-mortgage widely held fixed investment trust (NMWHFIT) for federal income tax purposes. As of December 31, 2016, 99% of the Trust’s estimated proved reserves consisted of natural gas reserves.

About Cimarex Energy

Cimarex Energy Co. is an independent oil and gas exploration and production company. The Company operates in exploration and production (E&P) segment. Its operations are located in Oklahoma, Texas and New Mexico. Its E&P activities take place primarily in two areas: the Permian Basin and the Mid-Continent region. Its Permian Basin region encompasses west Texas and southeast New Mexico. Its Mid-Continent region consists of Oklahoma and the Texas Panhandle. As of fiscal year ended December 31, 2016 (fiscal 2016), its activities in the Mid-Continent were focused in the Woodford shale and the Meramec horizon, both in Oklahoma. During fiscal 2016, production from the Mid-Continent averaged 457 millions of cubic feet equivalent (MMcfe) per day, or 47% of total company production. All of the Company’s oil and gas assets are located in the United States. As of December 31, 2016, 63% of its total proved reserves were located in the Mid-Continent region and 37% were in the Permian Basin.

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