Analyzing Shell (NYSE:SHEL) and TXO Partners (NYSE:TXO)

TXO Partners (NYSE:TXO) and Shell (NYSE:SHEL) are both oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Earnings and Valuation

This table compares TXO Partners and Shell’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TXO Partners	$380.72 million	1.47	-$103.99 million	($3.32)	-5.48
Shell	$323.18 billion	0.72	$19.36 billion	$5.66	12.79

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

Dividends

TXO Partners pays an annual dividend of $2.32 per share and has a dividend yield of 12.8%. Shell pays an annual dividend of $2.75 per share and has a dividend yield of 3.8%. TXO Partners pays out -69.9% of its earnings in the form of a dividend. Shell pays out 48.6% 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. TXO Partners has increased its dividend for 1 consecutive years and Shell has increased its dividend for 2 consecutive years. TXO Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings for TXO Partners and Shell, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TXO Partners	0	0	1	1	3.50
Shell	0	2	3	0	2.60

TXO Partners currently has a consensus price target of $26.00, indicating a potential upside of 42.94%. Shell has a consensus price target of $79.67, indicating a potential upside of 10.07%. Given TXO Partners’ stronger consensus rating and higher probable upside, research analysts plainly believe TXO Partners is more favorable than Shell.

Institutional & Insider Ownership

27.4% of TXO Partners shares are held by institutional investors. Comparatively, 28.6% of Shell shares are held by institutional investors. 1.0% of Shell shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares TXO Partners and Shell’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TXO Partners	-27.31%	6.89%	5.16%
Shell	5.99%	14.69%	6.79%

Risk & Volatility

TXO Partners has a beta of -0.18, indicating that its share price is 118% less volatile than the S&P 500. Comparatively, Shell has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500.

Summary

Shell beats TXO Partners on 12 of the 18 factors compared between the two stocks.

About TXO Partners

TXO Partners, L.P., an oil and natural gas company, focuses on the acquisition, development, optimization, and exploitation of conventional oil, natural gas, and natural gas liquid reserves in North America. Its acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado. The company was formerly known as TXO Energy Partners, L.P. and changed its name to TXO Partners, L.P. in May 2023. TXO Partners, L.P. was incorporated in 2012 and is based in Fort Worth, Texas.

About Shell

Shell plc operates as an energy and petrochemical company Europe, Asia, Oceania, Africa, the United States, and Rest of the Americas. The company operates through Integrated Gas, Upstream, Marketing, Chemicals and Products, and Renewables and Energy Solutions segments. It explores for and extracts crude oil, natural gas, and natural gas liquids; markets and transports oil and gas; produces gas-to-liquids fuels and other products; and operates upstream and midstream infrastructure to deliver gas to market. The company also markets and trades natural gas, liquefied natural gas (LNG), crude oil, electricity, carbon-emission rights; and markets and sells LNG as a fuel for heavy-duty vehicles. In addition, it trades in and refines crude oil and other feed stocks, such as low-carbon fuels, lubricants, bitumen, sulphur, gasoline, diesel, aviation fuel, and marine fuel; produces and sells petrochemicals for industrial use; and manages oil sands activities. Further, the company produces base chemicals comprising ethylene, propylene, and aromatics, as well as intermediate chemicals, such as styrene monomer, propylene oxide, solvents, detergent alcohols, ethylene oxide, and ethylene glycol. Additionally, it generates electricity through wind and solar resources; produces and sells hydrogen; and provides electric vehicle charging services. The company was formerly known as Royal Dutch Shell plc and changed its name to Shell plc in January 2022. Shell plc was founded in 1907 and is headquartered in London, the United Kingdom.