Analyzing TXO Partners (NYSE:TXO) and Epsilon Energy (NASDAQ:EPSN)

Epsilon Energy (NASDAQ:EPSN) and TXO Partners (NYSE:TXO) are both small-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.

Analyst Ratings

This is a breakdown of current ratings and target prices for Epsilon Energy and TXO Partners, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Epsilon Energy	0	0	1	1	3.50
TXO Partners	0	0	0	0	0.00

Epsilon Energy currently has a consensus price target of $7.00, suggesting a potential downside of 3.45%. Given Epsilon Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Epsilon Energy is more favorable than TXO Partners.

Institutional and Insider Ownership

60.3% of Epsilon Energy shares are owned by institutional investors. Comparatively, 27.4% of TXO Partners shares are owned by institutional investors. 5.5% of Epsilon Energy 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.

Volatility & Risk

Epsilon Energy has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500. Comparatively, TXO Partners has a beta of 0.13, meaning that its stock price is 87% less volatile than the S&P 500.

Earnings and Valuation

This table compares Epsilon Energy and TXO Partners”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Epsilon Energy	$31.15 million	5.09	$6.95 million	$0.25	29.00
TXO Partners	$282.81 million	2.88	-$103.99 million	$0.69	28.71

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

Dividends

Epsilon Energy pays an annual dividend of $0.25 per share and has a dividend yield of 3.4%. TXO Partners pays an annual dividend of $2.44 per share and has a dividend yield of 12.3%. Epsilon Energy pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TXO Partners pays out 353.6% 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 Epsilon Energy and TXO Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Epsilon Energy	16.97%	5.31%	4.30%
TXO Partners	-63.22%	8.05%	5.41%

Summary

Epsilon Energy beats TXO Partners on 12 of the 17 factors compared between the two stocks.

About Epsilon Energy

Epsilon Energy Ltd., a North American onshore independent natural gas and oil company, engages in the acquisition, development, gathering, and production of natural oil and gas reserves in the United States. The company operates through Upstream and Gathering System segments. It has natural gas production in the Marcellus Shale in Pennsylvania; and oil, natural gas liquids, and natural gas production in the Permian Basin in Texas and New Mexico, and Anadarko Basin in Oklahoma. Epsilon Energy Ltd. was incorporated in 2005 and is based in Calgary, Canada.

About TXO Partners

TXO Partners, L.P., an oil and natural gas company, focuses on the acquisition, development, optimization, and exploitation of conventional oil, natural gas, and natural gas liquid reserves in North America. Its acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado. The company was formerly known as TXO Energy Partners, L.P. and changed its name to TXO Partners, L.P. in May 2023. TXO Partners, L.P. was incorporated in 2012 and is based in Fort Worth, Texas.