Archrock (AROC) vs. Ferrellgas Partners (FGP) Head to Head Analysis

Ferrellgas Partners (NYSE: FGP) and Archrock (NYSE:AROC) are both small-cap energy companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, earnings, risk and institutional ownership.

Institutional & Insider Ownership

6.0% of Ferrellgas Partners shares are held by institutional investors. Comparatively, 83.3% of Archrock shares are held by institutional investors. 0.5% of Ferrellgas Partners shares are held by company insiders. Comparatively, 2.5% of Archrock shares 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.

Risk and Volatility

Ferrellgas Partners has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500. Comparatively, Archrock has a beta of 3.2, meaning that its stock price is 220% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Ferrellgas Partners and Archrock, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ferrellgas Partners 2 2 0 0 1.50
Archrock 0 6 2 0 2.25

Ferrellgas Partners presently has a consensus target price of $5.00, suggesting a potential upside of 23.46%. Archrock has a consensus target price of $13.13, suggesting a potential upside of 40.37%. Given Archrock’s stronger consensus rating and higher probable upside, analysts plainly believe Archrock is more favorable than Ferrellgas Partners.

Profitability

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

Net Margins Return on Equity Return on Assets
Ferrellgas Partners -2.96% N/A -3.53%
Archrock -8.62% -2.93% -0.83%

Dividends

Ferrellgas Partners pays an annual dividend of $0.40 per share and has a dividend yield of 9.9%. Archrock pays an annual dividend of $0.48 per share and has a dividend yield of 5.1%. Ferrellgas Partners pays out -66.7% of its earnings in the form of a dividend. Archrock pays out -49.0% 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. Ferrellgas Partners is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Ferrellgas Partners and Archrock’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ferrellgas Partners $1.93 billion 0.20 -$54.20 million ($0.60) -6.75
Archrock $807.07 million 0.89 -$54.55 million ($0.98) -9.54

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

Ferrellgas Partners Company Profile

Ferrellgas Partners, L.P. is engaged in the retail distribution of propane and related equipment sales, and midstream operations, which include crude oil logistics. The Company’s segments include propane and related equipment sales, midstream operations-crude oil logistics, and corporate and other. The propane and related equipment sales segment consists of the distribution of propane and related equipment and supplies. The midstream operations-crude oil logistics segment is engaged in providing crude oil transportation and logistics services. The corporate and other segment includes midstream operations-water solutions. The Company’s two subsidiaries include Ferrellgas Partners Finance Corp. and the operating partnership. Its general partner performs all management functions for the Company and holds general partner interest in Ferrellgas Partners and the operating partnership. It is a distributor of propane and related equipment and supplies to customers in the United States.

Archrock Company Profile

Archrock, Inc. is a natural gas contract operations services company. The Company also provides natural gas compression services to customers in the oil and natural gas industry throughout the United States and supplies aftermarket services to customers that own compression equipment in the United States. The Company operates through two segments: contract operations and aftermarket services. The contract operations segment primarily provides natural gas compression services to meet specific customer requirements. The Company provides contract operations services, including the personnel, equipment, tools, materials and supplies to meet its customers’ natural gas compression needs. The aftermarket services segment provides a range of services to support the compression needs of customers, from parts sales and normal maintenance services to full operation of a customer’s owned assets.

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