Cactus vs. Epsilon Energy: A Detailed Stock Comparison

In a comparative analysis of two energy companies, Cactus, Inc. (NYSE: WHD) and Epsilon Energy Ltd. (NASDAQ: EPSN), key differences in profitability, analyst recommendations, dividends, and risk factors emerge, offering insights for investors. This evaluation sheds light on which stock may present a more favorable investment opportunity.

Analyst Recommendations and Price Targets

Recent recommendations indicate differing potential for growth between the two companies. According to MarketBeat, Cactus has a consensus price target of $47.75, reflecting a potential upside of 14.74%. In contrast, Epsilon Energy boasts a consensus price target of $8.40, which suggests a remarkable potential upside of 73.20%. Analysts generally favor Epsilon Energy due to its higher upside potential, indicating a more optimistic outlook for the company.

Profitability and Ownership Insights

Ownership stakes reveal investor confidence levels in both firms. Approximately 85.1% of Cactus shares are held by institutional investors, suggesting strong backing from major financial entities. Epsilon Energy, while still notable, has 60.3% of its shares owned by institutional investors. Insider ownership also shows disparity: 16.8% of Cactus shares are owned by company insiders compared to 7.1% for Epsilon Energy. This strong institutional presence in Cactus indicates belief in its long-term growth potential.

When it comes to dividends, Cactus pays an annual dividend of $0.56 per share, yielding 1.3%. Epsilon Energy offers a higher annual dividend of $0.25 per share, yielding 5.2%. However, Epsilon Energy pays out 92.6% of its earnings as dividends, raising concerns about its ability to sustain future payments compared to Cactus, which pays 22.3% of its earnings as dividends and has increased its dividend for four consecutive years.

Valuation, Earnings, and Volatility

Valuation metrics further illustrate Cactus’s financial strength. The company reports higher revenues and earnings per share (EPS) than Epsilon Energy, and its lower price-to-earnings ratio suggests it may be a more affordable investment at present. In terms of risk, Cactus exhibits a beta of 1.46, indicating that its stock price is 46% more volatile than the S&P 500 index. Conversely, Epsilon Energy’s beta of 0.04 signifies that it is 96% less volatile, appealing to risk-averse investors.

Overall, Cactus outperforms Epsilon Energy in 14 of the 17 factors analyzed, highlighting its stronger market position and financial stability.

Company Profiles

Cactus, Inc. is engaged in designing, manufacturing, selling, and leasing pressure control and spoolable pipes across various regions including the United States, Australia, and Canada. The company’s operations are divided into two segments: Pressure Control and Spoolable Technologies, which provide equipment for onshore oil and gas wells and related services.

Founded in 2011 and headquartered in Houston, Texas, Cactus has established a robust presence in the energy sector.

On the other hand, Epsilon Energy specializes in the acquisition, development, and production of natural gas and oil reserves. With operations primarily in the Marcellus Shale and Permian Basin, the company focuses on upstream activities in the energy sector. Established in 2005 and based in Calgary, Canada, Epsilon Energy’s portfolio includes significant natural gas production capabilities.

As investors weigh their options in the energy sector, this analysis provides a foundation for understanding the comparative advantages and risks of Cactus and Epsilon Energy.