Critical Analysis: YPF (YPF) vs. Royal Dutch Shell (RDS.A)

Royal Dutch Shell (NYSE: RDS.A) and YPF (NYSE:YPF) are both energy companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, institutional ownership, profitability, earnings, dividends and valuation.

Earnings & Valuation

This table compares Royal Dutch Shell and YPF’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Royal Dutch Shell $233.59 billion 1.21 $4.58 billion $2.59 26.31
YPF $14.27 billion 0.65 -$1.91 billion $0.32 73.88

Royal Dutch Shell has higher revenue and earnings than YPF. Royal Dutch Shell is trading at a lower price-to-earnings ratio than YPF, indicating that it is currently the more affordable of the two stocks.

Dividends

Royal Dutch Shell pays an annual dividend of $3.20 per share and has a dividend yield of 4.7%. YPF pays an annual dividend of $0.10 per share and has a dividend yield of 0.4%. Royal Dutch Shell pays out 123.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. YPF pays out 31.3% of its earnings in the form of a dividend. Royal Dutch Shell has raised its dividend for 2 consecutive years. Royal Dutch Shell is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Royal Dutch Shell and YPF’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Dutch Shell 3.71% 6.64% 3.13%
YPF 0.89% 1.71% 0.49%

Risk and Volatility

Royal Dutch Shell has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, YPF has a beta of 2.07, suggesting that its stock price is 107% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Royal Dutch Shell and YPF, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Dutch Shell 1 3 11 0 2.67
YPF 0 0 4 0 3.00

Royal Dutch Shell presently has a consensus price target of $59.37, indicating a potential downside of 12.89%. YPF has a consensus price target of $28.00, indicating a potential upside of 18.44%. Given YPF’s stronger consensus rating and higher possible upside, analysts plainly believe YPF is more favorable than Royal Dutch Shell.

Insider & Institutional Ownership

6.5% of Royal Dutch Shell shares are owned by institutional investors. Comparatively, 28.9% of YPF shares are owned by institutional investors. 1.0% of Royal Dutch Shell shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Royal Dutch Shell beats YPF on 11 of the 17 factors compared between the two stocks.

About Royal Dutch Shell

The Royal Dutch Shell plc explores for crude oil and natural gas around the world, both in conventional fields and from sources, such as tight rock, shale and coal formations. The Company’s segments include Integrated Gas, Upstream, Downstream and Corporate. The Integrated Gas segment is engaged in the liquefaction and transportation of gas and the conversion of natural gas to liquids to provide fuels and other products, as well as projects with an integrated activity, ranging from producing to commercializing gas. The Upstream segment includes the operations of Upstream, which is engaged in the exploration for and extraction of crude oil, natural gas and natural gas liquids, and the marketing and transportation of oil and gas, and Oil Sands, which is engaged in the extraction of bitumen from mined oil sands and conversion into synthetic crude oil. The Downstream segment is engaged in oil products and chemicals manufacturing, and marketing activities.

About YPF

YPF Sociedad Anonima (YPF) is an energy company. The Company is operating a fully integrated oil and gas chain. The Company operates through the segments, including Exploration and Production, Downstream, and Corporate and Other. The Company’s Exploration and Production segment includes exploration and production activities, natural gas and crude oil purchases, sales of natural gas, and to a lesser extent crude oil, to third parties and intersegment sales of crude oil, natural gas and its byproducts. The Company’s Downstream segment is engaged in the refining, transport, purchase of crude oil and natural gas from third parties and intersegment sales, and marketing of crude oil, natural gas, refined products, petrochemicals, electric power generation and natural gas distribution. The Company’s Corporate and Other segment carries out other activities.

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