Financial Review: Black Stone Minerals, L.P. (BSM) versus ECA Marcellus Trust I (ECT)

Black Stone Minerals, L.P. (NYSE: BSM) and ECA Marcellus Trust I (NYSE:ECT) are both small-cap oils/energy companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, earnings, profitability, institutional ownership and dividends.

Insider and Institutional Ownership

22.0% of Black Stone Minerals, L.P. shares are owned by institutional investors. Comparatively, 2.8% of ECA Marcellus Trust I shares are owned by institutional investors. 25.0% of Black Stone Minerals, L.P. shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Black Stone Minerals, L.P. has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500. Comparatively, ECA Marcellus Trust I has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500.

Profitability

This table compares Black Stone Minerals, L.P. and ECA Marcellus Trust I’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%
ECA Marcellus Trust I 84.48% 10.85% 10.57%

Valuation & Earnings

This table compares Black Stone Minerals, L.P. and ECA Marcellus Trust I’s top-line 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 6.95 $20.20 million $0.85 20.64
ECA Marcellus Trust I $4.75 million 8.89 $3.47 million $0.33 7.27

Black Stone Minerals, L.P. has higher revenue and earnings than ECA Marcellus Trust I. ECA Marcellus Trust I is trading at a lower price-to-earnings ratio than Black Stone Minerals, L.P., indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and price targets for Black Stone Minerals, L.P. and ECA Marcellus Trust I, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Black Stone Minerals, L.P. 0 1 3 0 2.75
ECA Marcellus Trust I 0 0 0 0 N/A

Black Stone Minerals, L.P. presently has a consensus price target of $18.50, indicating a potential upside of 5.47%. Given Black Stone Minerals, L.P.’s higher possible upside, equities research analysts clearly believe Black Stone Minerals, L.P. is more favorable than ECA Marcellus Trust I.

Dividends

Black Stone Minerals, L.P. pays an annual dividend of $1.25 per share and has a dividend yield of 7.1%. ECA Marcellus Trust I pays an annual dividend of $0.40 per share and has a dividend yield of 16.7%. 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. ECA Marcellus Trust I pays out 121.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ECA Marcellus Trust I is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Black Stone Minerals, L.P. beats ECA Marcellus Trust I on 9 of the 15 factors compared between the two stocks.

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.

ECA Marcellus Trust I Company Profile

ECA Marcellus Trust I (the Trust) is a statutory trust. The Trust is formed by Energy Corporation of America (ECA) to own royalty interests in natural gas properties owned and operated by ECA in the Marcellus Shale formation in Greene County, Pennsylvania. The Trust does not conduct any operations or activities. The Trust’s purpose is, in general, to hold the Royalty Interests to distribute to the Trust unitholders cash and to perform certain administrative functions in respect of the Royalty Interests and the Trust units. The Trust owns royalty interests in over 10 Producing Wells (the Producing Wells), and royalty interests in over 50 horizontal natural gas development wells to be drilled to the Marcellus Shale formation (the PUD Wells) within the area of mutual interest (AMI), in which ECA holds approximately 9,300 acres, of which it owned all of the working interests, in Greene County, Pennsylvania. It owns Royalty Interests in over 40 development wells that are in production.

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