San Juan Basin Royalty Trust (NYSE: SJT) and Apache (NYSE:APA) are both energy companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, dividends and profitability.
Risk and Volatility
San Juan Basin Royalty Trust has a beta of -0.17, indicating that its share price is 117% less volatile than the S&P 500. Comparatively, Apache has a beta of 1.24, indicating that its share price is 24% more volatile than the S&P 500.
This table compares San Juan Basin Royalty Trust and Apache’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|San Juan Basin Royalty Trust||94.95%||499.42%||284.57%|
Institutional & Insider Ownership
24.6% of San Juan Basin Royalty Trust shares are held by institutional investors. Comparatively, 96.2% of Apache shares are held by institutional investors. 0.5% of Apache shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
San Juan Basin Royalty Trust pays an annual dividend of $0.43 per share and has a dividend yield of 4.9%. Apache pays an annual dividend of $1.00 per share and has a dividend yield of 2.8%. San Juan Basin Royalty Trust pays out 54.4% of its earnings in the form of a dividend. Apache pays out 27.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Apache has raised its dividend for 4 consecutive years.
Valuation and Earnings
This table compares San Juan Basin Royalty Trust and Apache’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|San Juan Basin Royalty Trust||$17.53 million||23.40||$13.92 million||$0.79||11.14|
|Apache||$6.42 billion||2.10||$1.30 billion||$3.70||9.57|
Apache has higher revenue and earnings than San Juan Basin Royalty Trust. Apache is trading at a lower price-to-earnings ratio than San Juan Basin Royalty Trust, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and recommmendations for San Juan Basin Royalty Trust and Apache, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|San Juan Basin Royalty Trust||0||0||0||0||N/A|
Apache has a consensus price target of $43.67, indicating a potential upside of 23.32%. Given Apache’s higher possible upside, analysts clearly believe Apache is more favorable than San Juan Basin Royalty Trust.
Apache beats San Juan Basin Royalty Trust on 10 of the 16 factors compared between the two stocks.
San Juan Basin Royalty Trust Company Profile
San Juan Basin Royalty Trust is an express trust. The principal asset of the Trust is Royalty. Its Royalty is carved from working, royalty and other oil and natural gas interests owned by Southland Royalty Company, the predecessor to Burlington Resources Oil & Gas Company LP (Burlington), in properties located in the San Juan Basin of northwestern New Mexico (Subject Interests). The Trustee of the Trust is Compass Bank. The function of the Trustee is to collect the net proceeds attributable to the Royalty, to pay all expenses and charges of the Trust and distribute the remaining available income to the Unit Holders. The Trust does not operate the Subject Interests and is not empowered to carry on any business activity. It is a widely held fixed investment trust (WHFIT) and is classified as a non-mortgage widely held fixed investment trust (NMWHFIT) for federal income tax purposes. As of December 31, 2016, 99% of the Trust’s estimated proved reserves consisted of natural gas reserves.
Apache Company Profile
Apache Corporation is an independent energy company. The Company explores for, develops, and produces natural gas, crude oil and natural gas liquids. The Company’s production segments include: the United States, Egypt and the United Kingdom North Sea. It also pursues exploration interests in Suriname. In North America, the Company has three onshore regions: The Permian region, The Midcontinent/Gulf Coast region. The Permian region located in West Texas and New Mexico includes the Permian sub-basins, the Midland Basin, Central Basin Platform/Northwest Shelf and Delaware Basin. The Midcontinent/Gulf Coast region includes the Granite Wash, Tonkawa, Canyon Lime, Marmaton, and Cleveland formations of the West Anadarko Basin, the Woodford-SCOOP and Stack plays located in Central Oklahoma, and the Eagle Ford shale in South East Texas.
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