SandRidge Mississippian Trust I (NYSE: SDT) and Rex Energy Corporation (NASDAQ:REXX) are both small-cap oils/energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, valuation, institutional ownership, earnings and dividends.

Risk & Volatility

SandRidge Mississippian Trust I has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500. Comparatively, Rex Energy Corporation has a beta of 1.83, meaning that its stock price is 83% more volatile than the S&P 500.

Dividends

SandRidge Mississippian Trust I pays an annual dividend of $0.19 per share and has a dividend yield of 14.5%. Rex Energy Corporation does not pay a dividend. SandRidge Mississippian Trust I pays out 90.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares SandRidge Mississippian Trust I and Rex Energy Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SandRidge Mississippian Trust I 67.62% 19.15% 19.15%
Rex Energy Corporation -37.94% -140.84% -4.04%

Valuation and Earnings

This table compares SandRidge Mississippian Trust I and Rex Energy Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
SandRidge Mississippian Trust I $8.64 million 4.25 $5.88 million $0.21 6.24
Rex Energy Corporation $181.60 million 0.12 $58.24 million ($7.23) -0.32

Rex Energy Corporation has higher revenue and earnings than SandRidge Mississippian Trust I. Rex Energy Corporation is trading at a lower price-to-earnings ratio than SandRidge Mississippian Trust I, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

0.8% of SandRidge Mississippian Trust I shares are owned by institutional investors. Comparatively, 16.8% of Rex Energy Corporation shares are owned by institutional investors. 7.9% of Rex Energy Corporation 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.

Analyst Ratings

This is a summary of recent ratings for SandRidge Mississippian Trust I and Rex Energy Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SandRidge Mississippian Trust I 0 0 0 0 N/A
Rex Energy Corporation 0 3 1 0 2.25

Rex Energy Corporation has a consensus price target of $6.58, indicating a potential upside of 188.68%. Given Rex Energy Corporation’s higher probable upside, analysts clearly believe Rex Energy Corporation is more favorable than SandRidge Mississippian Trust I.

Summary

Rex Energy Corporation beats SandRidge Mississippian Trust I on 8 of the 14 factors compared between the two stocks.

SandRidge Mississippian Trust I Company Profile

SandRidge Mississippian Trust I is a statutory trust formed by and among SandRidge Energy, Inc. (SandRidge), The Bank of New York Mellon Trust Company, N.A., and The Corporation Trust Company. Sandridge offers various services to the Company, such as the operation of its development wells; remittance of net proceeds from the sale of associated production to the Company; administrative services, such as accounting, tax preparation, bookkeeping and informational services performed on behalf of the Company, and derivative agreement services related to production. The Company holds Royalty Interests in specified oil and natural gas properties located in the Mississippian formation in Alfalfa, Garfield, Grant and Woods counties in Oklahoma. The Mississippian formation is a carbonate hydrocarbon system located on the Anadarko Shelf. The top of the formation lies stratigraphically between the Pennsylvanian-aged Morrow formation and the Devonian-aged Woodford Shale formation.

Rex Energy Corporation Company Profile

Rex Energy Corporation is an independent oil, natural gas liquid (NGL) and natural gas company. The Company has operations in the Appalachian Basin and Illinois Basin. In the Appalachian Basin, the Company is focused on its Marcellus Shale, Utica Shale and Upper Devonian (Burkett) Shale drilling and exploration activities. In the Illinois Basin, the Company is focused on its developmental oil drilling on its properties. The Company owns an interest in approximately 1,820 oil and natural gas wells. The Company produces an average of over 195.8 net millions of cubic feet equivalent (MMcfe) per day, composed of approximately 62.4% natural gas, over 9.5% oil and approximately 28.1% NGLs. In the Illinois Basin, the Company produces an average of approximately 1,998 barrels of oil per day (bopd). Including both developed and undeveloped acreage, the Company controls approximately 99,200 gross (over 79,700 net) acres in Illinois, Indiana and Kentucky.

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