Approach Resources (NASDAQ: AREX) is one of 246 publicly-traded companies in the “Oil & Gas Exploration and Production” industry, but how does it compare to its peers? We will compare Approach Resources to similar companies based on the strength of its valuation, institutional ownership, profitability, dividends, earnings, risk and analyst recommendations.

Analyst Ratings

This is a summary of recent recommendations for Approach Resources and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Approach Resources 1 5 2 0 2.13
Approach Resources Competitors 1435 7427 12038 255 2.53

Approach Resources presently has a consensus price target of $3.25, suggesting a potential upside of 40.69%. As a group, “Oil & Gas Exploration and Production” companies have a potential upside of 36.49%. Given Approach Resources’ higher possible upside, research analysts plainly believe Approach Resources is more favorable than its peers.

Valuation and Earnings

This table compares Approach Resources and its peers revenue, earnings per share (EPS) and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Approach Resources $101.58 million $49.31 million -0.88
Approach Resources Competitors $1.40 billion $602.68 million 21.81

Approach Resources’ peers have higher revenue and earnings than Approach Resources. Approach Resources is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Risk & Volatility

Approach Resources has a beta of 2.76, indicating that its stock price is 176% more volatile than the S&P 500. Comparatively, Approach Resources’ peers have a beta of 1.42, indicating that their average stock price is 42% more volatile than the S&P 500.

Insider & Institutional Ownership

24.3% of Approach Resources shares are held by institutional investors. Comparatively, 61.2% of shares of all “Oil & Gas Exploration and Production” companies are held by institutional investors. 5.1% of Approach Resources shares are held by company insiders. Comparatively, 11.8% of shares of all “Oil & Gas Exploration and Production” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Approach Resources and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Approach Resources -169.54% -6.84% -3.47%
Approach Resources Competitors -437.45% -2.62% 0.95%

Summary

Approach Resources peers beat Approach Resources on 9 of the 12 factors compared.

Approach Resources Company Profile

Approach Resources Inc. is an independent energy company. The Company is focused on the exploration, development, production and acquisition of unconventional oil and gas reserves in the Midland Basin of the greater Permian Basin in West Texas. The Company’s business segment is the exploration and production of oil, natural gas liquids (NGLs) and natural gas. The Company’s assets cover an area of approximately 126,000 net acres. Its proved reserves are approximately 166.6 million barrels of oil equivalent. The Company’s proved reserves are primarily located in Crockett and Schleicher Counties, Texas. The Company’s Permian Basin acreage is known as the Project Pangea. The Company owns and operates approximately 800 producing oil and gas wells in the Permian Basin. The Company, through a joint venture with EnCana Oil & Gas (USA) Inc., holds interests in the approximately 3,000 gross acre project in Limestone and Robertson Counties, Texas, in the East Texas Cotton Valley trend.

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