Approach Resources (NASDAQ: AREX) and Baytex Energy Corp (NYSE:BTE) are both small-cap oils/energy companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.
Institutional & Insider Ownership
24.3% of Approach Resources shares are owned by institutional investors. Comparatively, 15.8% of Baytex Energy Corp shares are owned by institutional investors. 5.1% of Approach Resources shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Approach Resources and Baytex Energy Corp’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Approach Resources||$101.58 million||2.14||$49.31 million||($2.64)||-0.95|
|Baytex Energy Corp||$614.84 million||1.08||$345.62 million||($1.32)||-2.14|
Baytex Energy Corp has higher revenue and earnings than Approach Resources. Baytex Energy Corp is trading at a lower price-to-earnings ratio than Approach Resources, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Approach Resources has a beta of 2.76, suggesting that its share price is 176% more volatile than the S&P 500. Comparatively, Baytex Energy Corp has a beta of 3.3, suggesting that its share price is 230% more volatile than the S&P 500.
This table compares Approach Resources and Baytex Energy Corp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Baytex Energy Corp||-38.91%||-5.17%||-2.21%|
This is a breakdown of current ratings and target prices for Approach Resources and Baytex Energy Corp, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Baytex Energy Corp||1||5||1||0||2.00|
Approach Resources presently has a consensus price target of $3.25, suggesting a potential upside of 28.97%. Baytex Energy Corp has a consensus price target of $7.44, suggesting a potential upside of 163.74%. Given Baytex Energy Corp’s higher possible upside, analysts plainly believe Baytex Energy Corp is more favorable than Approach Resources.
Baytex Energy Corp beats Approach Resources on 8 of the 13 factors compared between the two stocks.
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.
Baytex Energy Corp Company Profile
Baytex Energy Corp. (Baytex) is engaged in the business of acquiring, developing, exploiting and holding interests in petroleum and natural gas properties and related assets in Canada (Alberta and Saskatchewan) and in the United States (Texas). The Company’s crude oil and natural gas operations are organized into four business units: Lloydminster, Peace River, Conventional and United States. Each business unit has a portfolio of mineral leases, operated and non-operated properties and development prospects. The Company’s subsidiaries include Baytex Energy Ltd. and Baytex Energy USA, Inc. Baytex Energy Ltd. is engaged in the business of oil and natural gas exploration, exploitation, development, acquisition and production in Canada. Baytex Energy USA, Inc. is engaged in the business of oil and natural gas exploration, exploitation, development, acquisition and production in the United States. It holds all of the operating assets in the United States.
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