Black Stone Minerals (NYSE:BSM) vs. TransGlobe Energy (TGA) Critical Comparison

TransGlobe Energy (NASDAQ: TGA) and Black Stone Minerals (NYSE:BSM) are both small-cap oils/energy companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, institutional ownership, earnings, dividends, analyst recommendations, valuation and profitability.

Analyst Ratings

This is a summary of current ratings and price targets for TransGlobe Energy and Black Stone Minerals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TransGlobe Energy 0 1 0 0 2.00
Black Stone Minerals 0 2 2 0 2.50

Black Stone Minerals has a consensus price target of $19.00, indicating a potential upside of 7.34%. Given Black Stone Minerals’ stronger consensus rating and higher probable upside, analysts plainly believe Black Stone Minerals is more favorable than TransGlobe Energy.

Dividends

Black Stone Minerals pays an annual dividend of $1.25 per share and has a dividend yield of 7.1%. TransGlobe Energy does not pay a dividend. Black Stone Minerals 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. TransGlobe Energy has raised its dividend for 2 consecutive years.

Earnings and Valuation

This table compares TransGlobe Energy and Black Stone Minerals’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TransGlobe Energy $122.36 million 0.85 -$87.66 million ($1.54) -0.94
Black Stone Minerals $260.83 million 7.02 $20.20 million $0.85 20.82

Black Stone Minerals has higher revenue and earnings than TransGlobe Energy. TransGlobe Energy is trading at a lower price-to-earnings ratio than Black Stone Minerals, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

TransGlobe Energy has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Black Stone Minerals has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Profitability

This table compares TransGlobe Energy and Black Stone Minerals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TransGlobe Energy -83.42% -7.08% -4.70%
Black Stone Minerals 21.57% 11.44% 6.99%

Insider & Institutional Ownership

17.9% of TransGlobe Energy shares are owned by institutional investors. Comparatively, 22.0% of Black Stone Minerals shares are owned by institutional investors. 4.0% of TransGlobe Energy shares are owned by company insiders. Comparatively, 25.0% of Black Stone Minerals shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Black Stone Minerals beats TransGlobe Energy on 14 of the 17 factors compared between the two stocks.

About TransGlobe Energy

TransGlobe Energy Corporation is an oil exploration and production company. The Company’s activities are concentrated in the Arab Republic of Egypt (Egypt). The Company conducts its operations through the Arab Republic of Egypt segment. The Company is primarily engaged in oil exploration, development, production and the acquisition of properties. It holds interests in various production sharing concessions (PSC) in Eastern Desert Egypt and Western Desert Egypt. Its blocks in Eastern Desert Egypt include West Gharib, which covers approximately 34,860 acres; West Bakr, covering over 11,600 acres; North West (NW) Gharib, covering approximately 162,000 acres; South East (SE) Gharib, which covers over 125,650 acres, and South West (SW) Gharib, covering approximately 48,310 acres. Its blocks in the Western Desert Egypt include South Alamein, covering approximately 335,830 acres; South Ghazalat, covering over 465,300 acres, and North West (NW) Sitra, covering approximately 480,850 acres.

About Black Stone Minerals

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.

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