Critical Survey: Black Stone Minerals, L.P. (BSM) & Parsley Energy (PE)
Black Stone Minerals, L.P. (NYSE: BSM) and Parsley Energy (NYSE:PE) are both oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.
Valuation & Earnings
This table compares Black Stone Minerals, L.P. and Parsley Energy’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Black Stone Minerals, L.P.||$260.83 million||6.78||$20.20 million||$0.85||20.13|
|Parsley Energy||$457.77 million||17.48||-$74.18 million||$0.08||318.16|
Black Stone Minerals, L.P. has higher revenue, but lower earnings than Parsley Energy. Black Stone Minerals, L.P. is trading at a lower price-to-earnings ratio than Parsley Energy, indicating that it is currently the more affordable of the two stocks.
This table compares Black Stone Minerals, L.P. and Parsley Energy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Black Stone Minerals, L.P.||21.57%||11.44%||6.99%|
Risk and Volatility
Black Stone Minerals, L.P. has a beta of 0.3, suggesting that its share price is 70% less volatile than the S&P 500. Comparatively, Parsley Energy has a beta of -0.05, suggesting that its share price is 105% less volatile than the S&P 500.
This is a summary of recent recommendations and price targets for Black Stone Minerals, L.P. and Parsley Energy, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Black Stone Minerals, L.P.||0||1||3||0||2.75|
Black Stone Minerals, L.P. currently has a consensus price target of $18.50, indicating a potential upside of 8.12%. Parsley Energy has a consensus price target of $39.90, indicating a potential upside of 56.80%. Given Parsley Energy’s stronger consensus rating and higher possible upside, analysts plainly believe Parsley Energy is more favorable than Black Stone Minerals, L.P..
Insider and Institutional Ownership
22.2% of Black Stone Minerals, L.P. shares are owned by institutional investors. Comparatively, 78.7% of Parsley Energy shares are owned by institutional investors. 25.0% of Black Stone Minerals, L.P. shares are owned by company insiders. Comparatively, 15.5% of Parsley Energy 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.
Black Stone Minerals, L.P. pays an annual dividend of $1.25 per share and has a dividend yield of 7.3%. Parsley Energy does not pay a dividend. Black Stone Minerals, L.P. pays out 147.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Black Stone Minerals, L.P. Company Profile
Black Stone Minerals, L.P. is an owner of oil and natural gas mineral interests in the United States. The Company’s principal business is maximizing the value of its existing portfolio of mineral and royalty assets through active management and expanding its asset base through acquisitions of additional mineral and royalty interests. As of December 31, 2016, it owned mineral interests in approximately 15.5 million acres, with an average 45.7% ownership interest in that acreage. As of December 31, 2016, it also owned nonparticipating royalty interests in 1.5 million acres and overriding royalty interests in 1.5 million acres. As of December 31, 2016, these non-cost-bearing interests, which it referred to collectively as its mineral and royalty interests, included ownership in 50,000 producing wells. As of December 31, 2016, its mineral and royalty interests were located in 41 states and in 64 onshore basins in the continental United States.
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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