Oceaneering International (NYSE:OII) vs. Archrock Partners (APLP) Critical Survey

Archrock Partners (NASDAQ: APLP) and Oceaneering International (NYSE:OII) are both small-cap energy companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Dividends

Archrock Partners pays an annual dividend of $1.14 per share and has a dividend yield of 10.0%. Oceaneering International pays an annual dividend of $0.60 per share and has a dividend yield of 3.1%. Archrock Partners pays out -438.5% of its earnings in the form of a dividend. Oceaneering International pays out -315.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Archrock Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Archrock Partners and Oceaneering International’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Archrock Partners $562.36 million 1.42 -$10.75 million ($0.26) -43.88
Oceaneering International $2.27 billion 0.84 $24.58 million ($0.19) -101.63

Oceaneering International has higher revenue and earnings than Archrock Partners. Oceaneering International is trading at a lower price-to-earnings ratio than Archrock Partners, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Archrock Partners has a beta of 2.2, meaning that its stock price is 120% more volatile than the S&P 500. Comparatively, Oceaneering International has a beta of 1.63, meaning that its stock price is 63% more volatile than the S&P 500.

Institutional and Insider Ownership

46.8% of Archrock Partners shares are held by institutional investors. Comparatively, 99.7% of Oceaneering International shares are held by institutional investors. 0.4% of Archrock Partners shares are held by company insiders. Comparatively, 0.9% of Oceaneering International shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Archrock Partners and Oceaneering International, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Archrock Partners 0 3 1 0 2.25
Oceaneering International 3 12 5 0 2.10

Archrock Partners currently has a consensus target price of $17.50, indicating a potential upside of 53.37%. Oceaneering International has a consensus target price of $24.84, indicating a potential upside of 28.66%. Given Archrock Partners’ stronger consensus rating and higher possible upside, equities analysts clearly believe Archrock Partners is more favorable than Oceaneering International.

Profitability

This table compares Archrock Partners and Oceaneering International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Archrock Partners -3.10% 4.32% 1.15%
Oceaneering International -0.94% 0.21% 0.10%

Archrock Partners Company Profile

Archrock Partners, L.P. is engaged in natural gas compression industry in the United States. The Company’s contract operations services include designing, sourcing, owning, installing, operating, servicing, repairing and maintaining equipment to provide natural gas compression services to its customers. It provides contract operations services, including the personnel, equipment, tools, materials and supplies to meet its customers’ natural gas compression needs. Archrock General Partner, L.P., its general partner, is a subsidiary of Archrock and has responsibility for conducting its business and for managing its operations. The Company utilizes both slow and high speed reciprocating compressors primarily driven by internal natural gas fired combustion engines. Its customers include companies engaged in various aspects of the oil and natural gas industry, including natural gas producers, processors, gatherers, transporters and storage providers.

Oceaneering International Company Profile

Oceaneering International, Inc. is an oilfield provider of engineered services and products, primarily to the offshore oil and gas industry, with a focus on deepwater applications. The Company’s business segments are contained within two businesses: services and products provided to the oil and gas industry (Oilfield) and all other services and products (Advanced Technologies). Its four business segments within the Oilfield business are Remotely Operated Vehicles (ROVs), Subsea Products, Subsea Projects and Asset Integrity. The services and products it provides to the oil and gas industry include remotely operated vehicles, specialty subsea hardware, engineering and project management, subsea intervention services, including manned diving, survey and positioning services and asset integrity and nondestructive testing services. The Company serves the defense, aerospace and commercial theme park industries.

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