BHP Billiton Limited (BHP) versus Dorchester Minerals, L.P. (DMLP) Critical Analysis

BHP Billiton Limited (NYSE: BHP) and Dorchester Minerals, L.P. (NASDAQ:DMLP) are both basic materials companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Earnings and Valuation

This table compares BHP Billiton Limited and Dorchester Minerals, L.P.’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
BHP Billiton Limited $38.29 billion 1.79 $5.89 billion N/A N/A
Dorchester Minerals, L.P. $37.56 million 13.41 $20.23 million $0.96 16.25

BHP Billiton Limited has higher revenue and earnings than Dorchester Minerals, L.P..

Risk & Volatility

BHP Billiton Limited has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500. Comparatively, Dorchester Minerals, L.P. has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for BHP Billiton Limited and Dorchester Minerals, L.P., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BHP Billiton Limited 5 5 5 0 2.00
Dorchester Minerals, L.P. 0 0 0 0 N/A

BHP Billiton Limited presently has a consensus price target of $34.61, indicating a potential downside of 19.10%. Given BHP Billiton Limited’s higher probable upside, analysts clearly believe BHP Billiton Limited is more favorable than Dorchester Minerals, L.P..

Insider & Institutional Ownership

3.0% of BHP Billiton Limited shares are held by institutional investors. Comparatively, 13.5% of Dorchester Minerals, L.P. shares are held by institutional investors. 0.0% of BHP Billiton Limited shares are held by insiders. Comparatively, 9.2% of Dorchester Minerals, L.P. shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

BHP Billiton Limited pays an annual dividend of $1.72 per share and has a dividend yield of 4.0%. Dorchester Minerals, L.P. pays an annual dividend of $1.14 per share and has a dividend yield of 7.3%. Dorchester Minerals, L.P. pays out 118.8% 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 BHP Billiton Limited and Dorchester Minerals, L.P.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BHP Billiton Limited N/A N/A N/A
Dorchester Minerals, L.P. 57.88% 32.38% 32.26%

Summary

Dorchester Minerals, L.P. beats BHP Billiton Limited on 7 of the 13 factors compared between the two stocks.

About BHP Billiton Limited

BHP Billiton Limited is a global resources company. The Company is a producer of various commodities, including iron ore, metallurgical coal, copper and uranium. Its segments include Petroleum, Copper, Iron Ore and Coal. The Petroleum segment is engaged in the exploration, development and production of oil and gas. The Copper segment is engaged in mining of copper, silver, lead, zinc, molybdenum, uranium and gold. The Iron Ore segment is engaged in mining of iron ore. The Coal segment is engaged in mining of metallurgical coal and thermal (energy) coal. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing. The Company extracts and processes minerals, oil and gas from its production operations located primarily in Australia and the Americas. The Company manages product distribution through its global logistics chain, including freight and pipeline transportation. Its businesses include Minerals Australia, Minerals Americas, Petroleum and Marketing.

About Dorchester Minerals, L.P.

Dorchester Minerals, L.P. is a limited partnership company. The Company is engaged in the acquisition, ownership and administration of Royalty Properties and net profits interests (NPIs). As of December 31, 2016, the Royalty Properties consisted of producing and nonproducing mineral, royalty, overriding royalty, net profits and leasehold interests located in 574 counties and parishes in 25 states. The NPIs represent net profits overriding royalty interests in various properties owned by the Company. As of December 31, 2016, the Company had completed 270 wells on its Royalty Properties in seven states, and 39 new wells completed on its Properties in three states. The Company owns both a royalty interest and a net profits interest. The Company’s general partner is Dorchester Minerals Management LP.

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