Reviewing Permian Basin Royalty Trust (NYSE:PBT) and Gevo (NASDAQ:GEVO)

Gevo (NASDAQ:GEVO) and Permian Basin Royalty Trust (NYSE:PBT) are both small-cap energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.

Institutional and Insider Ownership

35.2% of Gevo shares are held by institutional investors. Comparatively, 28.9% of Permian Basin Royalty Trust shares are held by institutional investors. 7.1% of Gevo shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Gevo and Permian Basin Royalty Trust”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gevo	$177.51 million	1.78	-$33.84 million	($0.89)	-1.44
Permian Basin Royalty Trust	$16.13 million	103.01	$14.30 million	$0.35	101.85

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

Analyst Recommendations

This is a summary of recent recommendations for Gevo and Permian Basin Royalty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gevo	1	3	2	0	2.17
Permian Basin Royalty Trust	0	1	0	0	2.00

Gevo currently has a consensus target price of $2.55, suggesting a potential upside of 99.22%. Given Gevo’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Gevo is more favorable than Permian Basin Royalty Trust.

Profitability

This table compares Gevo and Permian Basin Royalty Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gevo	-119.93%	-6.50%	-4.22%
Permian Basin Royalty Trust	91.96%	9,990.08%	510.19%

Volatility & Risk

Gevo has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Permian Basin Royalty Trust has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500.

About Gevo

Gevo, Inc. operates as a carbon abatement company. It operates through three segments: Gevo, Agri-Energy, and Renewable Natural Gas. The company focuses on transforming renewable energy into energy-dense liquid hydrocarbons that can be used as renewable fuels. It offers renewable gasoline and diesel, isobutanol, sustainable aviation fuel, renewable natural gas, isobutylene, ethanol, and animal feed and protein. The company was formerly known as Methanotech, Inc. and changed its name to Gevo, Inc. in March 2006. Gevo, Inc. was incorporated in 2005 and is headquartered in Englewood, Colorado.

About Permian Basin Royalty Trust

Permian Basin Royalty Trust, an express trust, holds royalty interests in various oil and gas properties in the United States. The company holds a 75% net overriding royalty interest in the Waddell Ranch properties, including Dune, Sand Hills (Judkins), Sand Hills (McKnight), Sand Hills (Tubb), University-Waddell (Devonian) and Waddell fields in Crane County, Texas. It also holds a 95% net overriding royalty in the Texas Royalty properties, which consist of various producing oil fields, such as Yates, Wasson, Sand Hills, East Texas, Kelly-Snyder, Panhandle Regular, N. Cowden, Todd, Keystone, Kermit, McElroy, Howard-Glasscock, Seminole, and others located in Texas. Its Texas Royalty properties comprise approximately 125 separate royalty interests containing approximately 51,000 net producing acres. The company was founded in 1980 and is based in Dallas, Texas.