Torchlight Energy Resources (NASDAQ:TRCH) and Unit (NYSE:UNT) are both small-cap oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, valuation, institutional ownership and risk.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Torchlight Energy Resources and Unit, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Torchlight Energy Resources 0 0 2 0 3.00
Unit 0 4 0 0 2.00

Torchlight Energy Resources presently has a consensus price target of $1.75, suggesting a potential upside of 136.49%. Unit has a consensus price target of $28.00, suggesting a potential upside of 26.13%. Given Torchlight Energy Resources’ stronger consensus rating and higher probable upside, research analysts plainly believe Torchlight Energy Resources is more favorable than Unit.

Profitability

This table compares Torchlight Energy Resources and Unit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Torchlight Energy Resources -147.43% -11.90% -6.31%
Unit 14.60% 3.28% 1.84%

Institutional & Insider Ownership

8.5% of Torchlight Energy Resources shares are held by institutional investors. Comparatively, 91.7% of Unit shares are held by institutional investors. 29.3% of Torchlight Energy Resources shares are held by company insiders. Comparatively, 3.3% of Unit shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Torchlight Energy Resources and Unit’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Torchlight Energy Resources $570,000.00 91.02 -$910,000.00 N/A N/A
Unit $739.64 million 1.62 $117.84 million $0.54 41.11

Unit has higher revenue and earnings than Torchlight Energy Resources.

Volatility and Risk

Torchlight Energy Resources has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, Unit has a beta of 2.82, indicating that its stock price is 182% more volatile than the S&P 500.

Summary

Unit beats Torchlight Energy Resources on 7 of the 12 factors compared between the two stocks.

About Torchlight Energy Resources

Torchlight Energy Resources, Inc., through its subsidiaries, engages in the acquisition, exploration, exploitation, and/or development of oil and natural gas properties in the United States. As of December 31, 2017 it had interests in four oil and gas projects, including the Orogrande project in Hudspeth County, Texas; Hazel project in Sterling, Tom Green, and Irion Counties, Texas; Winkler project in Winkler County, Texas; and Hunton wells in partnership with Husky Ventures in Central Oklahoma. The company was founded in 2010 and is based in Plano, Texas.

About Unit

Unit Corporation, together with its subsidiaries, operates as a diversified energy company in the United States. The company operates through three segments: Oil and Natural Gas, Contract Drilling, and Mid-Stream. The Oil and Natural Gas segment acquires, explores, develops, and produces oil and natural gas properties. It operates approximately 6,500 wells; and has a reserve base of 150 million barrels of oil equivalent primarily in Oklahoma and Texas. The Contract Drilling segment is involved in the contract drilling of onshore oil and natural gas wells for its own account, as well as for a range of other oil and natural gas companies, primarily in the Rocky Mountain and Mid-Continent regions. It has 96 drilling rigs in its fleet. The Mid-Stream segment buys, sells, gathers, processes, and treats natural gas for third parties and for its own account. This segment operates 3 natural gas treatment plants, 14 processing plants, 22 gathering systems, and approximately 1,460 miles of pipeline in Oklahoma, Texas, Kansas, Pennsylvania, and West Virginia. Unit Corporation was founded in 1963 and is headquartered in Tulsa, Oklahoma.

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