Critical Analysis: WPX Energy (WPX) versus ARC Resources (AETUF)

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WPX Energy (NYSE:WPX) and ARC Resources (OTCMKTS:AETUF) are both mid-cap oils/energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Insider and Institutional Ownership

93.7% of WPX Energy shares are owned by institutional investors. Comparatively, 0.0% of ARC Resources shares are owned by institutional investors. 1.5% of WPX Energy shares are owned 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 WPX Energy and ARC Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WPX Energy -30.02% -0.97% -0.46%
ARC Resources 10.19% 3.67% 2.17%

Volatility & Risk

WPX Energy has a beta of 2.33, suggesting that its share price is 133% more volatile than the S&P 500. Comparatively, ARC Resources has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for WPX Energy and ARC Resources, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WPX Energy 0 1 24 1 3.00
ARC Resources 0 1 0 0 2.00

WPX Energy presently has a consensus target price of $22.96, indicating a potential upside of 23.44%. Given WPX Energy’s stronger consensus rating and higher probable upside, equities analysts clearly believe WPX Energy is more favorable than ARC Resources.

Dividends

ARC Resources pays an annual dividend of $0.46 per share and has a dividend yield of 4.3%. WPX Energy does not pay a dividend.

Earnings & Valuation

This table compares WPX Energy and ARC Resources’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
WPX Energy $1.34 billion 5.85 -$16.00 million ($0.42) -44.29
ARC Resources $945.11 million 3.99 $299.99 million N/A N/A

ARC Resources has lower revenue, but higher earnings than WPX Energy.

Summary

WPX Energy beats ARC Resources on 9 of the 15 factors compared between the two stocks.

About WPX Energy

WPX Energy, Inc., an independent oil and natural gas exploration and production company, engages in the exploitation and development of unconventional properties in the United States. The company's principal areas of operation include the Delaware Basin in Texas and New Mexico; the Williston Basin in North Dakota; and the San Juan Basin in New Mexico and Colorado. As of December 31, 2017, it had proved reserves of 436 million barrels of oil equivalent. The company was incorporated in 2011 and is headquartered in Tulsa, Oklahoma.

About ARC Resources

ARC Resources Ltd., together with its subsidiaries, engages in the acquisition, exploration, development, and production of crude oil, natural gas, condensate, and natural gas liquids. The company primarily holds interests in the Montney resource play properties located in northeast British Columbia and northern Alberta; and other assets located in the Cardium formation in the Pembina area of Alberta. As of December 31, 2017, it had proved plus probable reserves of 836.1 MMboe. The company was founded in 1996 and is headquartered in Calgary, Canada.

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