Contrasting Viper Energy Partners (NASDAQ:VNOM) & Falcon Minerals (NASDAQ:FLMN)

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Viper Energy Partners (NASDAQ:VNOM) and Falcon Minerals (NASDAQ:FLMN) are both oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, valuation, earnings, analyst recommendations, risk and institutional ownership.

Institutional & Insider Ownership

38.8% of Viper Energy Partners shares are held by institutional investors. Comparatively, 39.0% of Falcon Minerals shares are held by institutional investors. 0.3% of Viper Energy Partners shares are held by insiders. Comparatively, 15.8% of Falcon Minerals shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Viper Energy Partners pays an annual dividend of $1.88 per share and has a dividend yield of 7.0%. Falcon Minerals pays an annual dividend of $0.60 per share and has a dividend yield of 9.4%. Viper Energy Partners pays out 174.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Falcon Minerals pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Viper Energy Partners has increased its dividend for 2 consecutive years.

Volatility and Risk

Viper Energy Partners has a beta of 1.28, meaning that its stock price is 28% more volatile than the S&P 500. Comparatively, Falcon Minerals has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Viper Energy Partners and Falcon Minerals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Viper Energy Partners 0 0 16 2 3.11
Falcon Minerals 0 2 8 0 2.80

Viper Energy Partners presently has a consensus target price of $40.41, indicating a potential upside of 49.90%. Falcon Minerals has a consensus target price of $9.87, indicating a potential upside of 54.49%. Given Falcon Minerals’ higher possible upside, analysts plainly believe Falcon Minerals is more favorable than Viper Energy Partners.

Profitability

This table compares Viper Energy Partners and Falcon Minerals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Viper Energy Partners 13.18% 0.62% 0.52%
Falcon Minerals 31.57% 10.79% 9.61%

Valuation and Earnings

This table compares Viper Energy Partners and Falcon Minerals’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Viper Energy Partners $288.82 million 12.61 $143.95 million $1.08 24.96
Falcon Minerals $97.20 million 5.64 $90.13 million $0.20 31.95

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

Summary

Viper Energy Partners beats Falcon Minerals on 10 of the 18 factors compared between the two stocks.

About Viper Energy Partners

Viper Energy Partners LP owns, acquires, and exploits oil and natural gas properties in North America. As of December 31, 2018, it had mineral interests in 14,841 net royalty acres in the Permian Basin and Eagle Ford Shale with estimated proved oil and natural gas reserves of 63,136 thousand barrels of crude oil equivalent. Viper Energy Partners GP LLC operates as the general partner of the company. The company was founded in 2013 and is based in Midland, Texas.

About Falcon Minerals

Falcon Minerals Corporation acquires and owns mineral, royalty, and over-riding royalty interests in oil and natural gas properties in North America. It owns interests covering approximately 256,000 gross unit acres in the Eagle Ford Shale and Austin Chalk in Karnes, DeWitt, and Gonzales Counties in Texas, as well as approximately 68,000 gross unit acres in Pennsylvania, Ohio, and West Virginia that is prospective for the Marcellus Shale. The company is based in Philadelphia, Pennsylvania.

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