PermRock Royalty Trust (NYSE:PRT) versus DT Midstream (NYSE:DTM) Critical Analysis

PermRock Royalty Trust (NYSE:PRT) and DT Midstream (NYSE:DTM) are both energy companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.

Profitability

This table compares PermRock Royalty Trust and DT Midstream’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PermRock Royalty Trust	84.81%	7.46%	7.31%
DT Midstream	33.90%	8.48%	4.13%

Risk and Volatility

PermRock Royalty Trust has a beta of 1.12, suggesting that its share price is 12% more volatile than the S&P 500. Comparatively, DT Midstream has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for PermRock Royalty Trust and DT Midstream, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PermRock Royalty Trust	0	0	0	0	0.00
DT Midstream	2	4	7	0	2.38

DT Midstream has a consensus price target of $112.00, indicating a potential downside of 2.11%. Given DT Midstream’s stronger consensus rating and higher probable upside, analysts plainly believe DT Midstream is more favorable than PermRock Royalty Trust.

Dividends

PermRock Royalty Trust pays an annual dividend of $0.37 per share and has a dividend yield of 9.4%. DT Midstream pays an annual dividend of $3.28 per share and has a dividend yield of 2.9%. PermRock Royalty Trust pays out 84.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DT Midstream pays out 87.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. DT Midstream has increased its dividend for 2 consecutive years. PermRock Royalty Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares PermRock Royalty Trust and DT Midstream”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PermRock Royalty Trust	$6.02 million	7.92	$5.16 million	$0.44	8.91
DT Midstream	$981.00 million	11.85	$354.00 million	$3.73	30.67

DT Midstream has higher revenue and earnings than PermRock Royalty Trust. PermRock Royalty Trust is trading at a lower price-to-earnings ratio than DT Midstream, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

41.7% of PermRock Royalty Trust shares are owned by institutional investors. Comparatively, 81.5% of DT Midstream shares are owned by institutional investors. 0.3% of DT Midstream shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

DT Midstream beats PermRock Royalty Trust on 12 of the 17 factors compared between the two stocks.

About PermRock Royalty Trust

PermRock Royalty Trust operates as a statutory trust. It owns interests in the oil and natural gas producing properties. The company's underlying properties include 22,394 net acres in the Permian Basin. The company was founded in 2017 and is based in Dallas, Texas.

About DT Midstream

DT Midstream, Inc., together with its subsidiaries, provides integrated natural gas services in the United States. The company operates through two segments, Pipeline and Gathering. The Pipeline segment owns and operates interstate and intrastate natural gas pipelines, storage systems, and natural gas gathering lateral pipelines. This segment also engages in the transportation and storage of natural gas for intermediate and end-user customers. The Gathering segment owns and operates gas gathering systems. This segment is involved in the collection of natural gas for delivery to plants for treating, to gathering pipelines for further gathering, or to pipelines for transportation; and provision of associated ancillary services, including compression, dehydration, gas treatment, water impoundment, water transportation, water disposal, and sand mining. It serves natural gas producers, local distribution companies, electric power generators, industrials, and national marketers. The company was incorporated in 2021 and is headquartered in Detroit, Michigan.