Head-To-Head Review: Permian Basin Royalty Trust (NYSE:PBT) versus Marathon Petroleum (NYSE:MPC)

Marathon Petroleum (NYSE:MPC) and Permian Basin Royalty Trust (NYSE:PBT) are both energy companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, valuation, analyst recommendations, dividends and profitability.

Risk and Volatility

Marathon Petroleum has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500. Comparatively, Permian Basin Royalty Trust has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.

Earnings and Valuation

This table compares Marathon Petroleum and Permian Basin Royalty Trust”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Marathon Petroleum	$135.22 billion	0.98	$4.05 billion	$29.09	15.60
Permian Basin Royalty Trust	$16.13 million	101.02	$14.30 million	$0.35	99.89

Marathon Petroleum has higher revenue and earnings than Permian Basin Royalty Trust. Marathon Petroleum 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.

Dividends

Marathon Petroleum pays an annual dividend of $4.00 per share and has a dividend yield of 0.9%. Permian Basin Royalty Trust pays an annual dividend of $0.24 per share and has a dividend yield of 0.7%. Marathon Petroleum pays out 13.8% of its earnings in the form of a dividend. Permian Basin Royalty Trust pays out 68.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Marathon Petroleum has increased its dividend for 3 consecutive years. Marathon Petroleum is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Marathon Petroleum	5.48%	31.96%	8.88%
Permian Basin Royalty Trust	91.96%	9,990.08%	510.19%

Institutional & Insider Ownership

76.8% of Marathon Petroleum shares are owned by institutional investors. Comparatively, 28.9% of Permian Basin Royalty Trust shares are owned by institutional investors. 0.2% of Marathon Petroleum shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Marathon Petroleum and Permian Basin Royalty Trust, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Marathon Petroleum	0	5	11	1	2.76
Permian Basin Royalty Trust	0	1	0	0	2.00

Marathon Petroleum currently has a consensus target price of $383.69, suggesting a potential downside of 15.46%. Given Marathon Petroleum’s stronger consensus rating and higher probable upside, research analysts clearly believe Marathon Petroleum is more favorable than Permian Basin Royalty Trust.

Summary

Marathon Petroleum beats Permian Basin Royalty Trust on 12 of the 18 factors compared between the two stocks.

About Marathon Petroleum

Marathon Petroleum Corporation, together with its subsidiaries, operates as an integrated downstream energy company primarily in the United States. The company operates through Refining & Marketing, and Midstream segments. The Refining & Marketing segment refines crude oil and other feedstocks at its refineries in the Gulf Coast, Mid-Continent, and West Coast regions of the United States; and purchases refined products and ethanol for resale and distributes refined products, including renewable diesel, through transportation, storage, distribution, and marketing services. Its refined products include transportation fuels, such as reformulated gasolines and blend-grade gasolines; heavy fuel oil; and asphalt. This segment also manufactures propane and petrochemicals. It sells refined products to wholesale marketing customers in the United States and internationally, buyers on the spot market, and independent entrepreneurs who operate primarily Marathon branded outlets, as well as through long-term fuel supply contracts to direct dealer locations primarily under the ARCO brand. The Midstream segment transports, stores, distributes, and markets crude oil and refined products through refining logistics assets, pipelines, terminals, towboats, and barges; gathers, processes, and transports natural gas; and gathers, transports, fractionates, stores, and markets natural gas liquids. Marathon Petroleum Corporation was founded in 1887 and is headquartered in Findlay, Ohio.

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.