SandRidge Permian Trust (NYSE: PER) and Parsley Energy (NYSE:PE) are both oils/energy companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, institutional ownership, valuation, dividends, analyst recommendations, earnings and profitabiliy.
Insider and Institutional Ownership
5.3% of SandRidge Permian Trust shares are held by institutional investors. Comparatively, 91.6% of Parsley Energy shares are held by institutional investors. 29.0% of SandRidge Permian Trust shares are held by company insiders. Comparatively, 15.5% of Parsley Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Profitability
This table compares SandRidge Permian Trust and Parsley Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| SandRidge Permian Trust | 87.06% | 17.14% | 17.14% |
| Parsley Energy | -4.26% | 2.04% | 1.35% |
Dividends
SandRidge Permian Trust pays an annual dividend of $0.52 per share and has a dividend yield of 17.6%. Parsley Energy does not pay a dividend. SandRidge Permian Trust pays out 113.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Analyst Ratings
This is a breakdown of current ratings and recommmendations for SandRidge Permian Trust and Parsley Energy, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| SandRidge Permian Trust | 0 | 0 | 1 | 0 | 3.00 |
| Parsley Energy | 0 | 3 | 22 | 0 | 2.88 |
Parsley Energy has a consensus target price of $40.20, indicating a potential upside of 44.60%. Given Parsley Energy’s higher possible upside, analysts clearly believe Parsley Energy is more favorable than SandRidge Permian Trust.
Volatility and Risk
SandRidge Permian Trust has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, Parsley Energy has a beta of -0.11, meaning that its stock price is 111% less volatile than the S&P 500.
Valuation and Earnings
This table compares SandRidge Permian Trust and Parsley Energy’s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| SandRidge Permian Trust | $26.72 million | 5.80 | $24.15 million | $0.46 | 6.41 |
| Parsley Energy | $596.14 million | 11.49 | $357.89 million | ($0.19) | -146.32 |
Parsley Energy has higher revenue and earnings than SandRidge Permian Trust. Parsley Energy is trading at a lower price-to-earnings ratio than SandRidge Permian Trust, indicating that it is currently the more affordable of the two stocks.
SandRidge Permian Trust Company Profile
Sandridge Permian Trust (the Trust) is a statutory trust. The Trust holds Royalty Interests in specified oil and natural gas properties in the Permian Basin located in Andrews County, Texas. The Trust’s business activities are generally limited to owning the Royalty Interests, and entering into hedging arrangements at the inception of the Trust and activities related thereto, including activities required or permitted by the terms of the conveyances related to the Royalty Interests. The Trust’s properties consist of Royalty Interests in the initial wells and over 860 additional wells that are drilled and perforated for completion. The Royalty Interests are in properties located in the greater Fuhrman-Mascho field, a field in Andrews County, Texas that produces oil primarily from the Grayburg/San Andres formation in the Permian Basin. The Permian Basin extends throughout southwestern Texas and southeastern New Mexico over an area approximately 250 miles wide and over 300 miles long.
Parsley Energy Company Profile
Parsley Energy, Inc. is a holding company. The Company is an independent oil and natural gas company. The Company focuses on the acquisition, development and exploitation of unconventional oil and natural gas reserves in the Permian Basin. The Permian Basin is located in West Texas and Southeastern New Mexico and includes three primary sub-areas: the Midland Basin, the Central Basin Platform and the Delaware Basin. The Company’s properties are primarily located in the Midland and Delaware Basins, where it focuses on horizontal development drilling and target various stacked pay intervals in the Spraberry, Wolfcamp, Upper Pennsylvanian (Cline) and Atoka shales. As of December 31, 2016, it had an average working interest of 87% in 166 gross (146.7 net) horizontal wells, of which 151 gross (132.4 net) are in the Midland Basin. As of December 31, 2016, the Company operated seven horizontal rigs and three vertical drilling rigs.
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