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

Dividends

Viper Energy Partners pays an annual dividend of $1.35 per share and has a dividend yield of 6.2%. Rice Energy does not pay a dividend. Viper Energy Partners pays out 153.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

27.1% of Viper Energy Partners shares are owned by institutional investors. Comparatively, 87.2% of Rice Energy shares are owned by institutional investors. 1.7% of Rice Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Viper Energy Partners and Rice Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viper Energy Partners 0 1 9 1 3.00
Rice Energy 0 18 5 0 2.22

Viper Energy Partners presently has a consensus target price of $22.22, indicating a potential upside of 2.41%. Rice Energy has a consensus target price of $27.71, indicating a potential downside of 5.49%. Given Viper Energy Partners’ stronger consensus rating and higher possible upside, analysts clearly believe Viper Energy Partners is more favorable than Rice Energy.

Profitability

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

Net Margins Return on Equity Return on Assets
Viper Energy Partners 60.87% 12.08% 11.11%
Rice Energy 12.25% -13.19% 2.20%

Valuation & Earnings

This table compares Viper Energy Partners and Rice Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Viper Energy Partners $79.15 million 31.22 -$10.89 million $0.88 24.66
Rice Energy $778.91 million 8.58 -$269.75 million ($1.24) -23.65

Viper Energy Partners has higher earnings, but lower revenue than Rice Energy. Rice 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.

Volatility and Risk

Viper Energy Partners has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500. Comparatively, Rice Energy has a beta of 1.57, meaning that its share price is 57% more volatile than the S&P 500.

Summary

Viper Energy Partners beats Rice Energy on 11 of the 17 factors compared between the two stocks.

Viper Energy Partners Company Profile

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.

Rice Energy Company Profile

Rice Energy Inc. (Rice Energy) is an independent natural gas and oil company. The Company is engaged in the acquisition, exploration and development of natural gas, oil and natural gas liquids (NGL) properties in the Appalachian Basin. The Company conducts its operations through two segments: Exploration and Production, and Midstream. The Exploration and Production segment is engaged in the acquisition, exploration and development of natural gas, oil and NGLs. The Exploration and Production segment operates in the cores of the Marcellus and Utica Shales. The Company controls approximately 231,000 net acres in the Marcellus and Ohio Utica Shale cores. It operates approximately 1,164 drilling locations. The Midstream segment is engaged in the gathering and compression of natural gas, oil and NGL production of, and in the provision of water services to support the well completion activities of, Rice Energy and third parties.

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