Investors are closely examining the prospects of two small-cap energy companies, Dawson Geophysical (NASDAQ:DWSN) and ProFrac (NASDAQ:ACDC), to determine which offers a more compelling investment opportunity. A detailed comparison reveals significant differences in profitability, volatility, institutional ownership, and analyst recommendations.
Risk Profile and Volatility
The volatility of a stock can greatly influence investment decisions. Dawson Geophysical features a beta of -0.1, indicating that its stock price is approximately 110% less volatile than the S&P 500. In stark contrast, ProFrac possesses a beta of 1.71, suggesting its stock is 71% more volatile than the market benchmark. This substantial difference in risk profiles may appeal to different types of investors, particularly those with varying risk tolerances.
Profitability and Valuation Metrics
When assessing profitability, Dawson Geophysical exhibits higher earnings relative to its scale, although it reports lower revenue compared to ProFrac. Specifically, Dawson’s earnings reflect a robust financial performance, yet its total revenue lags behind ProFrac’s.
In terms of valuation, Dawson Geophysical currently trades at a lower price-to-earnings ratio than ProFrac, making it a more affordable option for potential investors. This pricing difference indicates that Dawson may represent a value investment compared to its counterpart.
Analysts have recently weighed in on both companies. According to data from MarketBeat.com, ProFrac has a consensus target price of $5.25, which signifies a potential upside of 40%. This projection has led analysts to view ProFrac more favorably than Dawson Geophysical, despite Dawson’s strong earnings.
Institutional Ownership Insights
Institutional ownership can serve as a bellwether for long-term growth potential. Currently, 7.9% of Dawson Geophysical’s shares are owned by institutional investors. In comparison, 12.8% of ProFrac’s shares are held by institutions. Additionally, insider ownership reflects confidence in the company’s prospects, with 0.3% of Dawson Geophysical’s shares held by insiders, while ProFrac sees 2.6% ownership from company insiders.
Overall, the stronger institutional backing of ProFrac may indicate a more favorable outlook among significant investors, which could enhance its market appeal.
Company Profiles
Founded in 1952, Dawson Geophysical operates primarily in the United States and Canada, providing onshore seismic data acquisition and processing services. Their clientele includes major oil and gas companies, independent operators, and providers of data libraries. Headquartered in Midland, Texas, Dawson’s seismic crews focus on exploration and development projects on land and in transitional areas, as well as potash mining.
On the other hand, ProFrac Holding Corp., established in 2016 and headquartered in Willow Park, Texas, operates as a technology-driven energy services holding company. It offers a range of services, including hydraulic fracturing and well stimulation, to upstream oil and natural gas companies. ProFrac also manufactures high horsepower pumps and other completion products, serving the growing needs of the industry.
In conclusion, while Dawson Geophysical outperforms ProFrac in several areas, including profitability, the latter shows advantages in institutional support and potential market appreciation. Investors will need to weigh these factors carefully when considering their investment strategies in these small-cap energy companies.