Critical Survey: Shell (NYSE:SHEL) versus Dorchester Minerals (NASDAQ:DMLP)

Shell (NYSE:SHEL) and Dorchester Minerals (NASDAQ:DMLP) are both energy companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Volatility and Risk

Shell has a beta of 0.07, suggesting that its share price is 93% less volatile than the S&P 500. Comparatively, Dorchester Minerals has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500.

Insider and Institutional Ownership

28.6% of Shell shares are held by institutional investors. Comparatively, 19.2% of Dorchester Minerals shares are held by institutional investors. 1.0% of Shell shares are held by company insiders. Comparatively, 5.9% of Dorchester Minerals shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Shell and Dorchester Minerals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shell	0	8	12	2	2.73
Dorchester Minerals	0	1	0	0	2.00

Shell currently has a consensus price target of $107.08, indicating a potential upside of 10.06%. Given Shell’s stronger consensus rating and higher possible upside, equities analysts clearly believe Shell is more favorable than Dorchester Minerals.

Profitability

This table compares Shell and Dorchester Minerals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shell	9.96%	16.86%	7.94%
Dorchester Minerals	49.84%	34.73%	33.86%

Dividends

Shell pays an annual dividend of $3.12 per share and has a dividend yield of 3.2%. Dorchester Minerals pays an annual dividend of $3.53 per share and has a dividend yield of 12.8%. Shell pays out 27.1% of its earnings in the form of a dividend. Dorchester Minerals pays out 170.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings & Valuation

This table compares Shell and Dorchester Minerals”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Shell	$273.73 billion	1.02	$17.84 billion	$11.52	8.45
Dorchester Minerals	$152.83 million	9.06	$55.25 million	$2.07	13.29

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

Summary

Shell beats Dorchester Minerals on 9 of the 17 factors compared between the two stocks.

About Shell

Shell plc is a global energy company engaged in the exploration and production of oil and natural gas, natural gas liquefaction and marketing, and the refining and sale of fuels and other products. Its businesses also include chemicals, power and energy solutions, including lower-carbon offerings such as biofuels, hydrogen and electric-vehicle charging. The company serves customers and operates across regions worldwide. Its products and services reach consumers, businesses and industrial customers through activities such as fuel retailing, natural gas supply, chemicals production and energy trading.

About Dorchester Minerals

Dorchester Minerals, L.P. is a publicly traded limited partnership that owns oil and natural gas mineral and royalty interests. The partnership also holds overriding royalty and net profits interests in producing and undeveloped properties. Dorchester generally does not drill or operate wells. Instead, it leases its mineral interests to exploration and production companies, which develop the properties; Dorchester receives royalties and other payments tied to production and applicable agreements.