Reviewing Northern Oil and Gas (NYSE:NOG) & Epsilon Energy (NASDAQ:EPSN)

Northern Oil and Gas (NYSE:NOG) and Epsilon Energy (NASDAQ:EPSN) are both energy companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, valuation, profitability, earnings, risk, institutional ownership and analyst recommendations.

Valuation & Earnings

This table compares Northern Oil and Gas and Epsilon Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northern Oil and Gas	$2.21 billion	1.21	$922.97 million	$6.42	4.22
Epsilon Energy	$39.70 million	4.00	$6.95 million	$0.21	34.33

Northern Oil and Gas has higher revenue and earnings than Epsilon Energy. Northern Oil and Gas is trading at a lower price-to-earnings ratio than Epsilon Energy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Northern Oil and Gas and Epsilon Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northern Oil and Gas	23.38%	24.41%	10.61%
Epsilon Energy	16.97%	5.31%	4.30%

Dividends

Northern Oil and Gas pays an annual dividend of $1.80 per share and has a dividend yield of 6.6%. Epsilon Energy pays an annual dividend of $0.25 per share and has a dividend yield of 3.5%. Northern Oil and Gas pays out 28.0% of its earnings in the form of a dividend. Epsilon Energy pays out 119.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Northern Oil and Gas has raised its dividend for 4 consecutive years. Northern Oil and Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

98.8% of Northern Oil and Gas shares are held by institutional investors. Comparatively, 60.3% of Epsilon Energy shares are held by institutional investors. 2.9% of Northern Oil and Gas shares are held by insiders. Comparatively, 5.5% of Epsilon Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Northern Oil and Gas and Epsilon Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northern Oil and Gas	0	5	4	1	2.60
Epsilon Energy	0	0	1	1	3.50

Northern Oil and Gas presently has a consensus price target of $39.67, suggesting a potential upside of 46.37%. Epsilon Energy has a consensus price target of $7.70, suggesting a potential upside of 6.80%. Given Northern Oil and Gas’ higher possible upside, research analysts clearly believe Northern Oil and Gas is more favorable than Epsilon Energy.

Volatility and Risk

Northern Oil and Gas has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500. Comparatively, Epsilon Energy has a beta of 0.17, suggesting that its stock price is 83% less volatile than the S&P 500.

Summary

Northern Oil and Gas beats Epsilon Energy on 13 of the 17 factors compared between the two stocks.

About Northern Oil and Gas

Northern Oil and Gas, Inc., an independent energy company, engages in the acquisition, exploration, exploitation, development, and production of crude oil and natural gas properties in the United States. It primarily holds interests in the Williston Basin, the Appalachian Basin, and the Permian Basin in the United States. The company is based in Minnetonka, Minnesota.

About Epsilon Energy

Epsilon Energy Ltd., a North American onshore independent natural gas and oil company, engages in the acquisition, development, gathering, and production of natural oil and gas reserves in the United States. The company operates through Upstream and Gathering System segments. It has natural gas production in the Marcellus Shale in Pennsylvania; and oil, natural gas liquids, and natural gas production in the Permian Basin in Texas and New Mexico, and Anadarko Basin in Oklahoma. Epsilon Energy Ltd. was incorporated in 2005 and is based in Calgary, Canada.