Petroquest Energy (NYSE: PQ) and Viper Energy Partners (NASDAQ:VNOM) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Earnings & Valuation

This table compares Petroquest Energy and Viper Energy Partners’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Petroquest Energy $77.60 million 0.47 $30.48 million ($2.16) -0.79
Viper Energy Partners $118.19 million 17.50 $104.04 million $0.76 23.90

Viper Energy Partners has higher revenue and earnings than Petroquest Energy. Petroquest Energy is trading at a lower price-to-earnings ratio than Viper Energy Partners, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

37.5% of Petroquest Energy shares are owned by institutional investors. Comparatively, 15.6% of Viper Energy Partners shares are owned by institutional investors. 9.4% of Petroquest Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations for Petroquest Energy and Viper Energy Partners, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Petroquest Energy 0 2 1 0 2.33
Viper Energy Partners 0 1 8 1 3.00

Petroquest Energy currently has a consensus price target of $3.50, suggesting a potential upside of 104.68%. Viper Energy Partners has a consensus price target of $21.56, suggesting a potential upside of 18.70%. Given Petroquest Energy’s higher probable upside, equities research analysts plainly believe Petroquest Energy is more favorable than Viper Energy Partners.

Volatility and Risk

Petroquest Energy has a beta of 2.02, indicating that its share price is 102% more volatile than the S&P 500. Comparatively, Viper Energy Partners has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500.

Dividends

Viper Energy Partners pays an annual dividend of $1.33 per share and has a dividend yield of 7.3%. Petroquest Energy does not pay a dividend. Viper Energy Partners pays out 175.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Petroquest Energy and Viper Energy Partners’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Petroquest Energy -46.00% N/A -17.77%
Viper Energy Partners 58.60% 11.19% 10.11%

Summary

Viper Energy Partners beats Petroquest Energy on 11 of the 16 factors compared between the two stocks.

About Petroquest Energy

PetroQuest Energy, Inc. is an oil and gas company. The Company is engaged in exploratory, development and acquisition activities. The Company has approximately 30 gross exploratory wells and over 30 gross development wells. The Company has reserves in various areas, including East Texas, Gulf Coast Basin and Oklahoma Woodford. Its annual production from East Texas area is approximately 114.1 billions of cubic feet equivalent (Bcfe); Gulf Coast Basin is over 43.9 Bcfe, and Oklahoma Woodford is approximately 20.0 Bcfe. The net production from its East Texas assets averages over 30.4 millions of cubic feet equivalent (MMcfe) per day. Production from Gulf Coast Basin area totals approximately 37.8 MMcfe per day. The average daily production from its Oklahoma-Woodford properties totals over 25 MMcfe per day. The Company sells its oil and natural gas production under fixed or floating market contracts.

About Viper Energy Partners

Viper Energy Partners LP is engaged in owning, acquiring and exploiting oil and natural gas properties in North America. The Company’s assets are located in the Permian Basin of West Texas. As of December 31, 2016, the Permian Basin consisted of approximately 85,000 square miles. As of December 31, 2016, its assets consisted of mineral interests underlying 107,568 gross acres in the Permian Basin. As of December 31, 2016, there were 545 vertical wells and 190 horizontal wells producing on this acreage. As of December 31, 2016, its estimated proved oil and natural gas reserves of its assets was 31,435 thousand barrels of crude oil equivalent (MBOE). As of December 31, 2016, the Company’s proved reserves were approximately 68% oil, 18% natural gas liquids and 14% natural gas. In addition to its mineral interests, the Company owns a minor equity interest in an entity that owns mineral, overriding royalty, net profits, leasehold and other similar interests.

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