Analyzing San Juan Basin Royalty Trust (SJT) & Eclipse Resources (ECR)

San Juan Basin Royalty Trust (NYSE: SJT) and Eclipse Resources (NYSE:ECR) are both small-cap oils/energy companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, earnings, analyst recommendations, institutional ownership, dividends, valuation and risk.

Risk and Volatility

San Juan Basin Royalty Trust has a beta of -0.37, indicating that its stock price is 137% less volatile than the S&P 500. Comparatively, Eclipse Resources has a beta of 3.06, indicating that its stock price is 206% more volatile than the S&P 500.

Institutional & Insider Ownership

25.7% of San Juan Basin Royalty Trust shares are owned by institutional investors. Comparatively, 92.5% of Eclipse Resources shares are owned by institutional investors. 1.1% of Eclipse Resources 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.

Analyst Recommendations

This is a summary of current ratings and target prices for San Juan Basin Royalty Trust and Eclipse Resources, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
San Juan Basin Royalty Trust 0 0 0 0 N/A
Eclipse Resources 1 4 6 0 2.45

Eclipse Resources has a consensus target price of $3.25, suggesting a potential upside of 60.89%. Given Eclipse Resources’ higher probable upside, analysts plainly believe Eclipse Resources is more favorable than San Juan Basin Royalty Trust.

Valuation and Earnings

This table compares San Juan Basin Royalty Trust and Eclipse Resources’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
San Juan Basin Royalty Trust $17.53 million 24.36 $13.92 million $0.78 11.74
Eclipse Resources $235.03 million 2.26 -$203.80 million ($0.16) -12.63

San Juan Basin Royalty Trust has higher earnings, but lower revenue than Eclipse Resources. Eclipse Resources is trading at a lower price-to-earnings ratio than San Juan Basin Royalty Trust, indicating that it is currently the more affordable of the two stocks.

Dividends

San Juan Basin Royalty Trust pays an annual dividend of $0.80 per share and has a dividend yield of 8.7%. Eclipse Resources does not pay a dividend. San Juan Basin Royalty Trust pays out 102.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eclipse Resources has increased its dividend for 4 consecutive years.

Profitability

This table compares San Juan Basin Royalty Trust and Eclipse Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
San Juan Basin Royalty Trust 94.95% 499.42% 284.57%
Eclipse Resources -11.46% -3.00% -1.44%

San Juan Basin Royalty Trust Company Profile

San Juan Basin Royalty Trust is an express trust. The principal asset of the Trust is Royalty. Its Royalty is carved from working, royalty and other oil and natural gas interests owned by Southland Royalty Company, the predecessor to Burlington Resources Oil & Gas Company LP (Burlington), in properties located in the San Juan Basin of northwestern New Mexico (Subject Interests). The Trustee of the Trust is Compass Bank. The function of the Trustee is to collect the net proceeds attributable to the Royalty, to pay all expenses and charges of the Trust and distribute the remaining available income to the Unit Holders. The Trust does not operate the Subject Interests and is not empowered to carry on any business activity. It is a widely held fixed investment trust (WHFIT) and is classified as a non-mortgage widely held fixed investment trust (NMWHFIT) for federal income tax purposes. As of December 31, 2016, 99% of the Trust’s estimated proved reserves consisted of natural gas reserves.

Eclipse Resources Company Profile

Eclipse Resources Corporation is an independent exploration and production company. The Company is engaged in the acquisition and development of oil and natural gas properties in the Appalachian Basin. The Company is the operator of the Utica Core Area and its Marcellus Project Area. The Ordovician-aged Utica Shale is an unconventional reservoir consisting of organic-rich black shale, with production occurring at vertical depths between 6,000 and 10,000 feet. The Marcellus Shale consists of organic-rich black shale, with production occurring at vertical depths between 5,000 and 8,000 feet. As of December 31, 2016, the Company had commenced drilling 202 gross wells within the Utica Core Area and three gross wells within its Marcellus Area. As of December 31, 2016, it had approximately 92,000 net acres in the Utica Shale in Eastern Ohio within the Utica Core Area. As of December 31, 2016, the Company had assembled an acreage position approximating 199,000 net acres in Eastern Ohio.

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