Contrasting InterOil (IOC) & Royal Dutch Shell PLC (RDS.B)

InterOil (NYSE: IOC) and Royal Dutch Shell PLC (NYSE:RDS.B) are both mid-cap energy companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, dividends, valuation, profitability, institutional ownership, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of current ratings and target prices for InterOil and Royal Dutch Shell PLC, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
InterOil	0	0	0	0	N/A
Royal Dutch Shell PLC	0	0	0	0	N/A

Institutional & Insider Ownership

46.6% of InterOil shares are owned by institutional investors. Comparatively, 5.3% of Royal Dutch Shell PLC shares are owned by institutional investors. 1.0% of Royal Dutch Shell PLC shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Royal Dutch Shell PLC pays an annual dividend of $3.76 per share. InterOil does not pay a dividend. Royal Dutch Shell PLC pays out 191.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
InterOil	-233.48%	-14.08%	-8.85%
Royal Dutch Shell PLC	2.93%	6.04%	2.80%

Risk & Volatility

InterOil has a beta of 1.67, indicating that its share price is 67% more volatile than the S&P 500. Comparatively, Royal Dutch Shell PLC has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Valuation and Earnings

This table compares InterOil and Royal Dutch Shell PLC’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
InterOil	N/A	N/A	N/A	($3.70)	-13.07
Royal Dutch Shell PLC	N/A	N/A	N/A	$1.96	N/A

InterOil is trading at a lower price-to-earnings ratio than Royal Dutch Shell PLC, indicating that it is currently the more affordable of the two stocks.

Summary

Royal Dutch Shell PLC beats InterOil on 5 of the 8 factors compared between the two stocks.

InterOil Company Profile

InterOil Corporation (InterOil) is an oil and gas business with a sole focus on Papua New Guinea (PNG). The Company’s segments include Upstream and Corporate. The Upstream segment includes exploration, appraisal and development of hydrocarbon structures in PNG. The Corporate segment provides support to the Company’s other business segments through business development and improvement activities, general services, administration, human resources, executive management, financing and treasury, government affairs and investor relations. InterOil holds interests across over four exploration and approximately two production retention licenses in the Eastern Papuan Basin of Papua New Guinea. Its assets include the Elk, Antelope, Triceratops, Raptor and Bobcat fields in the Gulf Province of Papua New Guinea, and exploration licenses covering approximately 16,000 square kilometers (over four million acres) in Papua New Guinea.

Royal Dutch Shell PLC Company Profile

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.