Select Energy Services (NASDAQ: WTTR) and RigNet (NASDAQ:RNET) are both small-cap energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Profitability

This table compares Select Energy Services and RigNet’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Select Energy Services -7.80% -11.02% -8.68%
RigNet -5.69% -9.98% -4.94%

Insider and Institutional Ownership

91.3% of RigNet shares are owned by institutional investors. 1.2% of RigNet shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Select Energy Services and RigNet’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Select Energy Services $395.02 million 1.19 $45.45 million N/A N/A
RigNet $200.61 million 1.58 $22.97 million ($0.65) -26.85

Select Energy Services has higher revenue and earnings than RigNet.

Analyst Recommendations

This is a breakdown of recent ratings for Select Energy Services and RigNet, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Select Energy Services 1 1 5 0 2.57
RigNet 0 2 1 0 2.33

Select Energy Services currently has a consensus price target of $18.86, suggesting a potential upside of 21.58%. RigNet has a consensus price target of $19.33, suggesting a potential upside of 10.79%. Given Select Energy Services’ stronger consensus rating and higher probable upside, analysts clearly believe Select Energy Services is more favorable than RigNet.

Summary

RigNet beats Select Energy Services on 6 of the 11 factors compared between the two stocks.

About Select Energy Services

Select Energy Services, Inc. is a holding company. The Company is provider of total water solutions to the United States unconventional oil and gas industry. The Company is engaged in sourcing and transfer of water prior to its use in drilling and completion activities associated with hydraulic fracturing or fracking, which collectively referrd to as pre-frac water services. The Company provides its services to integrated and exploration and production (E&P) companies. Its operating segments include water solutions, accommodation and rentals, and wellsite completion and constructive services. The Company’s services include water sourcing, water transfer, water treatment, fluid handling, disposal solutions, accommodations, rentals, and wellsite construction. The Company also provides complementary water-related services that support oil and gas well completion and production activities including containment, monitoring, treatment, flowback, hauling and disposal.

About RigNet

RigNet, Inc. (RigNet) provides customized systems and solutions serving customers with data networking and operational requirements. The Company provides voice and data network, video conferencing and monitoring, crew welfare, asset and weather monitoring, and real-time data services. It operates through two segments: Managed Services, and Systems Integration and Automation (SI&A). The Managed Services segment provides remote communications services for offshore and onshore drilling rigs and production facilities, as well as, support vessels and other remote sites. The SI&A segment provides customized solutions for customer telecommunications systems. As of December 31, 2016, the Company provided remote communications and collaborative services to approximately 500 customers reaching approximately 900 remote sites located in approximately 50 countries on six continents. It provides managed remote communications, engineered telecommunications solutions and applications.

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