Dorchester Minerals, L.P. (NASDAQ: DMLP) and Freeport-McMoran (NYSE:FCX) are both oils/energy companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, profitability, dividends, analyst recommendations, valuation and institutional ownership.

Insider & Institutional Ownership

13.3% of Dorchester Minerals, L.P. shares are held by institutional investors. Comparatively, 68.0% of Freeport-McMoran shares are held by institutional investors. 9.2% of Dorchester Minerals, L.P. shares are held by insiders. Comparatively, 1.3% of Freeport-McMoran shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Dorchester Minerals, L.P. and Freeport-McMoran’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dorchester Minerals, L.P. 65.28% 41.71% 41.15%
Freeport-McMoran 5.97% 10.45% 2.60%

Valuation & Earnings

This table compares Dorchester Minerals, L.P. and Freeport-McMoran’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dorchester Minerals, L.P. $45.34 million 10.47 $38.15 million $0.95 15.47
Freeport-McMoran $15.31 billion 1.41 $5.20 billion $0.71 21.03

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

Dividends

Dorchester Minerals, L.P. pays an annual dividend of $1.29 per share and has a dividend yield of 8.8%. Freeport-McMoran does not pay a dividend. Dorchester Minerals, L.P. pays out 135.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Dorchester Minerals, L.P. has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, Freeport-McMoran has a beta of 2.54, suggesting that its stock price is 154% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for Dorchester Minerals, L.P. and Freeport-McMoran, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dorchester Minerals, L.P. 0 0 0 0 N/A
Freeport-McMoran 3 10 4 0 2.06

Freeport-McMoran has a consensus target price of $15.21, indicating a potential upside of 1.89%. Given Freeport-McMoran’s higher possible upside, analysts clearly believe Freeport-McMoran is more favorable than Dorchester Minerals, L.P..

Summary

Freeport-McMoran beats Dorchester Minerals, L.P. on 8 of the 15 factors compared between the two stocks.

Dorchester Minerals, L.P. Company Profile

Dorchester Minerals, L.P. is a limited partnership company. The Company is engaged in the acquisition, ownership and administration of Royalty Properties and net profits interests (NPIs). As of December 31, 2016, the Royalty Properties consisted of producing and nonproducing mineral, royalty, overriding royalty, net profits and leasehold interests located in 574 counties and parishes in 25 states. The NPIs represent net profits overriding royalty interests in various properties owned by the Company. As of December 31, 2016, the Company had completed 270 wells on its Royalty Properties in seven states, and 39 new wells completed on its Properties in three states. The Company owns both a royalty interest and a net profits interest. The Company’s general partner is Dorchester Minerals Management LP.

Freeport-McMoran Company Profile

Freeport-McMoRan Inc. (FCX) is a mining company. The Company operates through geographical assets with proven and probable reserves of copper, gold and molybdenum, and traded copper producer. The Company’s segments include refined copper products, copper in concentrate, gold, molybdenum, oil and other. The Company’s segments include the Morenci, Cerro Verde, Grasberg copper mines, the Rod & Refining operations and the United States (U.S.) Oil and Gas Operations. The Company has organized its operations into five divisions, which include North America copper mines, South America mining, Indonesia mining and Molybdenum mines. The Company’s portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits, and mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America.

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