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 competitors? We will compare Approach Resources to similar companies based on the strength of its profitability, earnings, analyst recommendations, dividends, valuation, institutional ownership and risk.

Volatility and Risk

Approach Resources has a beta of 2.76, meaning that its share price is 176% more volatile than the S&P 500. Comparatively, Approach Resources’ competitors have a beta of 1.41, meaning that their average share price is 41% more volatile than the S&P 500.

Profitability

This table compares Approach Resources and its competitors’ 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 -427.70% -1.48% 1.78%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Approach Resources and its competitors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Approach Resources 1 5 2 0 2.13
Approach Resources Competitors 1436 7439 12051 255 2.53

Approach Resources currently has a consensus price target of $3.25, indicating a potential upside of 42.54%. As a group, “Oil & Gas Exploration and Production” companies have a potential upside of 36.57%. Given Approach Resources’ higher probable upside, research analysts clearly believe Approach Resources is more favorable than its competitors.

Earnings & Valuation

This table compares Approach Resources and its competitors gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Approach Resources $101.58 million $49.31 million -0.86
Approach Resources Competitors $1.40 billion $602.68 million 21.40

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

Institutional & Insider Ownership

24.3% of Approach Resources shares are held by institutional investors. Comparatively, 63.0% of shares of all “Oil & Gas Exploration and Production” companies are held by institutional investors. 5.1% of Approach Resources shares are held by insiders. Comparatively, 11.9% of shares of all “Oil & Gas Exploration and Production” companies are held by insiders. 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.

Summary

Approach Resources competitors 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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