Comparing Freehold Royalties (OTCMKTS:FRHLF) & Surge Energy (OTCMKTS:ZPTAF)

Freehold Royalties (OTCMKTS:FRHLF) and Surge Energy (OTCMKTS:ZPTAF) are both energy companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, risk, profitability, dividends and earnings.

Institutional and Insider Ownership

37.0% of Freehold Royalties shares are held by institutional investors. Comparatively, 18.0% of Surge Energy shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Freehold Royalties pays an annual dividend of $1.82 per share and has a dividend yield of 21.4%. Surge Energy pays an annual dividend of $0.42 per share and has a dividend yield of 11.2%. Freehold Royalties pays out 181.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Surge Energy pays out 105.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of current ratings and price targets for Freehold Royalties and Surge Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freehold Royalties	0	1	0	0	2.00
Surge Energy	0	0	1	0	3.00

Freehold Royalties presently has a consensus target price of $16.00, indicating a potential upside of 88.57%. Surge Energy has a consensus target price of $9.00, indicating a potential upside of 140.00%. Given Surge Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Surge Energy is more favorable than Freehold Royalties.

Earnings and Valuation

This table compares Freehold Royalties and Surge Energy”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freehold Royalties	N/A	N/A	N/A	$1.00	8.47
Surge Energy	N/A	N/A	N/A	$0.40	9.34

Freehold Royalties is trading at a lower price-to-earnings ratio than Surge Energy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Freehold Royalties and Surge Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freehold Royalties	N/A	N/A	N/A
Surge Energy	N/A	N/A	N/A

Summary

Surge Energy beats Freehold Royalties on 5 of the 8 factors compared between the two stocks.

About Freehold Royalties

Freehold Royalties Ltd. engages in the acquiring and managing royalty interests in the crude oil, natural gas, natural gas liquids, and potash properties in Western Canada and the United States. Freehold Royalties Ltd. was founded in 1996 and is headquartered in Calgary, Canada.

About Surge Energy

Surge Energy Inc. explores, develops, and produces oil and gas in western Canada. Its principal properties are located in the areas of Sparky, Southeast Saskatchewan, Carbonates, Valhalla, and Shaunavon in Alberta and Saskatchewan. The company was formerly known as Zapata Energy Corporation and changed its name to Surge Energy Inc. in June 2010. Surge Energy Inc. was incorporated in 1998 and is headquartered in Calgary, Canada.