Financial Analysis: Royal Dutch Shell PLC (RDS.A) & KIMBELL ROYALTY (NYSE:KRP)

Royal Dutch Shell PLC (NYSE: RDS.A) and KIMBELL ROYALTY (NYSE:KRP) are both oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, valuation, dividends, risk and earnings.

Institutional and Insider Ownership

6.3% of Royal Dutch Shell PLC shares are held by institutional investors. Comparatively, 18.4% of KIMBELL ROYALTY shares are held by institutional investors. 1.0% of Royal Dutch Shell PLC shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Royal Dutch Shell PLC and KIMBELL ROYALTY, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Royal Dutch Shell PLC 2 3 11 0 2.56
KIMBELL ROYALTY 0 0 5 1 3.17

Royal Dutch Shell PLC currently has a consensus price target of $57.00, indicating a potential upside of Infinity. KIMBELL ROYALTY has a consensus price target of $21.83, indicating a potential upside of 38.01%. Given Royal Dutch Shell PLC’s higher probable upside, research analysts clearly believe Royal Dutch Shell PLC is more favorable than KIMBELL ROYALTY.

Earnings & Valuation

This table compares Royal Dutch Shell PLC and KIMBELL ROYALTY’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Royal Dutch Shell PLC N/A N/A N/A $1.96 N/A
KIMBELL ROYALTY $14.63 million 17.84 $7.45 million N/A N/A

KIMBELL ROYALTY has higher revenue and earnings than Royal Dutch Shell PLC.

Dividends

Royal Dutch Shell PLC pays an annual dividend of $3.20 per share. KIMBELL ROYALTY pays an annual dividend of $1.20 per share and has a dividend yield of 7.6%. Royal Dutch Shell PLC pays out 163.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Royal Dutch Shell PLC and KIMBELL ROYALTY’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Royal Dutch Shell PLC 2.91% 6.04% 2.80%
KIMBELL ROYALTY N/A N/A N/A

About Royal Dutch Shell PLC

The Royal Dutch Shell plc explores for crude oil and natural gas around the world, both in conventional fields and from sources, such as tight rock, shale and coal formations. The Company’s segments include Integrated Gas, Upstream, Downstream and Corporate. The Integrated Gas segment is engaged in the liquefaction and transportation of gas and the conversion of natural gas to liquids to provide fuels and other products, as well as projects with an integrated activity, ranging from producing to commercializing gas. The Upstream segment includes the operations of Upstream, which is engaged in the exploration for and extraction of crude oil, natural gas and natural gas liquids, and the marketing and transportation of oil and gas, and Oil Sands, which is engaged in the extraction of bitumen from mined oil sands and conversion into synthetic crude oil. The Downstream segment is engaged in oil products and chemicals manufacturing, and marketing activities.

About KIMBELL ROYALTY

Kimbell Royalty Partners, LP owns and acquires mineral and royalty interests in oil and natural gas properties throughout the United States. As of December 31, 2015, the Company owned mineral and royalty interests in approximately 3.7 million gross acres and overriding royalty interests in approximately 0.9 million gross acres, with approximately 44% of its acres located in the Permian Basin. As of December 31, 2015, the Company’s mineral and royalty interests were located in 20 states and in every onshore basin across the continental United States, and included ownership in over 48,000 gross producing wells, including over 29,000 wells in the Permian Basin. The Company’s properties include Permian Basin, Mid-Continent, Terryville/Cotton Valley/Haynesville, Eagle Ford, Barnett Shale/Fort Worth Basin, Bakken/Williston Basin, San Juan Basin, Onshore California, DJ Basin/Rockies/Niobrara, Illinois Basin and others.

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