SandRidge Mississippian Trust II (NYSE: SDR) and VAALCO Energy (NYSE:EGY) are both small-cap oils/energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, risk, earnings, profitability, valuation and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for SandRidge Mississippian Trust II and VAALCO Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SandRidge Mississippian Trust II 0 0 0 0 N/A
VAALCO Energy 0 1 0 0 2.00

VAALCO Energy has a consensus price target of $2.00, suggesting a potential upside of 153.16%. Given VAALCO Energy’s higher probable upside, analysts clearly believe VAALCO Energy is more favorable than SandRidge Mississippian Trust II.

Volatility and Risk

SandRidge Mississippian Trust II has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500. Comparatively, VAALCO Energy has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500.

Insider & Institutional Ownership

0.7% of SandRidge Mississippian Trust II shares are owned by institutional investors. Comparatively, 38.2% of VAALCO Energy shares are owned by institutional investors. 2.6% of VAALCO Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares SandRidge Mississippian Trust II and VAALCO Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SandRidge Mississippian Trust II $20.41 million 2.66 $16.09 million $0.24 4.54
VAALCO Energy $59.78 million 0.78 -$26.55 million $0.04 19.75

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

Profitability

This table compares SandRidge Mississippian Trust II and VAALCO Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SandRidge Mississippian Trust II 74.18% 17.64% 17.64%
VAALCO Energy 3.43% 77.99% 4.27%

Dividends

SandRidge Mississippian Trust II pays an annual dividend of $0.21 per share and has a dividend yield of 19.3%. VAALCO Energy does not pay a dividend. SandRidge Mississippian Trust II pays out 87.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

About SandRidge Mississippian Trust II

SandRidge Mississippian Trust II is a statutory trust. The royalty interests conveyed by SandRidge Energy, Inc. (SandRidge) from its interests in certain properties in the Mississippian formation in northern Oklahoma and southern Kansas and held by the Trust are referred to as the Royalty Interests. The Trust holds Royalty Interests in specified oil and natural gas properties. The Royalty Interests entitle the Trust to receive approximately 80% of the proceeds from the sale of oil, natural gas and natural gas liquids (NGLs) production attributable to SandRidge’s net revenue interest in approximately 50 wells producing and over 10 additional wells awaiting (together, the Initial Wells), and over 70% of the proceeds from the sale of oil, natural gas and NGL production attributable to SandRidge’s net revenue interest in approximately 200 horizontal oil and natural gas development wells drilled (the Trust Development Wells) within an area of mutual interest (AMI).

About VAALCO Energy

VAALCO Energy, Inc. is an independent energy company. The Company is engaged in the acquisition, exploration, development and production of crude oil and natural gas. Its segments include Gabon, Angola, Equatorial Guinea, the United States, and Corporate and other, which includes corporate and operations support. It owns producing properties and conducts exploration activities as an operator in Gabon, West Africa; conducts exploration activities as an operator in Angola, West Africa, and participates in exploration and development activities as a non-operator in Equatorial Guinea, West Africa. In the United States, it operates unconventional resource properties in North Texas and hold undeveloped leasehold acreage in Montana. It also owns minor interests in conventional production activities as a non-operator in the United States. Its Etame Marin block is located offshore the Republic of Gabon. It owns over 640-acre lease in the Hefley field (Granite Wash formation) in North Texas.

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