Contrasting Mesa Royalty Trust (NYSE:MTR) & Kimbell Royalty (NYSE:KRP)

Mesa Royalty Trust (NYSE:MTR) and Kimbell Royalty (NYSE:KRP) are both small-cap energy companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Profitability

This table compares Mesa Royalty Trust and Kimbell Royalty’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mesa Royalty Trust	73.26%	13.48%	13.12%
Kimbell Royalty	5.25%	9.69%	4.95%

Dividends

Mesa Royalty Trust pays an annual dividend of $0.45 per share and has a dividend yield of 8.0%. Kimbell Royalty pays an annual dividend of $1.88 per share and has a dividend yield of 13.1%. Mesa Royalty Trust pays out 204.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kimbell Royalty pays out 3,760.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mesa Royalty Trust has raised its dividend for 1 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Mesa Royalty Trust and Kimbell Royalty, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mesa Royalty Trust	0	0	0	0	0.00
Kimbell Royalty	1	3	1	0	2.00

Kimbell Royalty has a consensus target price of $17.40, suggesting a potential upside of 21.17%. Given Kimbell Royalty’s stronger consensus rating and higher probable upside, analysts clearly believe Kimbell Royalty is more favorable than Mesa Royalty Trust.

Insider and Institutional Ownership

12.7% of Mesa Royalty Trust shares are owned by institutional investors. Comparatively, 25.8% of Kimbell Royalty shares are owned by institutional investors. 5.6% of Kimbell Royalty shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Mesa Royalty Trust has a beta of 0.4, indicating that its share price is 60% less volatile than the S&P 500. Comparatively, Kimbell Royalty has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.

Earnings and Valuation

This table compares Mesa Royalty Trust and Kimbell Royalty”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mesa Royalty Trust	$650,000.00	16.07	$460,000.00	$0.22	25.52
Kimbell Royalty	$309.31 million	4.97	$12.32 million	$0.05	287.20

Kimbell Royalty has higher revenue and earnings than Mesa Royalty Trust. Mesa Royalty Trust is trading at a lower price-to-earnings ratio than Kimbell Royalty, indicating that it is currently the more affordable of the two stocks.

Summary

Kimbell Royalty beats Mesa Royalty Trust on 10 of the 17 factors compared between the two stocks.

About Mesa Royalty Trust

Mesa Royalty Trust owns overriding royalty interests in various oil and gas producing properties in the United States. It holds interests in properties located in the Hugoton field of Kansas; and the San Juan Basin field of Northwestern New Mexico and Southwestern Colorado. The company was founded in 1979 and is based in Houston, Texas.

About Kimbell Royalty

Kimbell Royalty Partners, LP, together with its subsidiaries, engages in acquiring and owning mineral and royalty interests in oil and natural gas properties in the United States. It serves as the general partner of the company. The company was incorporated in 2015 and is based in Fort Worth, Texas.