Royal Dutch Shell (NYSE: RDS.A) and Petroleo Brasileiro S.A.- Petrobras (NYSE:PBR) are both large-cap energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Profitability

This table compares Royal Dutch Shell and Petroleo Brasileiro S.A.- Petrobras’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Dutch Shell 3.71% 6.64% 3.13%
Petroleo Brasileiro S.A.- Petrobras 2.71% 4.17% 1.35%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Royal Dutch Shell and Petroleo Brasileiro S.A.- Petrobras, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Dutch Shell 1 5 9 0 2.53
Petroleo Brasileiro S.A.- Petrobras 1 4 2 0 2.14

Royal Dutch Shell currently has a consensus target price of $57.03, indicating a potential downside of 10.23%. Petroleo Brasileiro S.A.- Petrobras has a consensus target price of $10.91, indicating a potential upside of 10.57%. Given Petroleo Brasileiro S.A.- Petrobras’ higher possible upside, analysts clearly believe Petroleo Brasileiro S.A.- Petrobras is more favorable than Royal Dutch Shell.

Dividends

Royal Dutch Shell pays an annual dividend of $3.20 per share and has a dividend yield of 5.0%. Petroleo Brasileiro S.A.- Petrobras does not pay a dividend. Royal Dutch Shell pays out 123.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings & Valuation

This table compares Royal Dutch Shell and Petroleo Brasileiro S.A.- Petrobras’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Royal Dutch Shell $233.59 billion 1.13 $4.58 billion $2.59 24.53
Petroleo Brasileiro S.A.- Petrobras $81.41 billion 0.79 -$4.84 billion $0.36 27.40

Royal Dutch Shell has higher revenue and earnings than Petroleo Brasileiro S.A.- Petrobras. Royal Dutch Shell is trading at a lower price-to-earnings ratio than Petroleo Brasileiro S.A.- Petrobras, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Royal Dutch Shell has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, Petroleo Brasileiro S.A.- Petrobras has a beta of 2.43, indicating that its stock price is 143% more volatile than the S&P 500.

Insider and Institutional Ownership

6.5% of Royal Dutch Shell shares are owned by institutional investors. Comparatively, 5.6% of Petroleo Brasileiro S.A.- Petrobras shares are owned by institutional investors. 1.0% of Royal Dutch Shell shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Royal Dutch Shell beats Petroleo Brasileiro S.A.- Petrobras on 13 of the 16 factors compared between the two stocks.

About Royal Dutch Shell

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.

About Petroleo Brasileiro S.A.- Petrobras

Petroleo Brasileiro S.A.-Petrobras specializes in the oil, natural gas and energy industry. The Company is engaged in prospecting, drilling, refining, processing, trading and transporting crude oil from producing onshore and offshore oil fields and from shale or other rocks. Its segments include Exploration and Production, which covers the activities of exploration, development and production of crude oil, natural gas liquid and natural gas; Refining, Transportation and Marketing, which covers the refining, logistics, transport and trading of crude oil and oil products activities, exporting of ethanol, and extraction and processing of shale; Gas and Power, which is engaged in transportation and trading of natural gas produced in Brazil and imported natural gas; Biofuels, which covers the activities of production of biodiesel and its co-products, and ethanol-related activities; Distribution, which includes the activities of its subsidiary Petrobras Distribuidora S.A., and Corporate.

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