Archrock (NYSE: AROC) and Select Energy Services (NYSE:WTTR) are both small-cap oils/energy companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, valuation, dividends, institutional ownership, profitability and risk.
This table compares Archrock and Select Energy Services’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Select Energy Services||-2.31%||1.34%||1.08%|
This is a summary of recent ratings and price targets for Archrock and Select Energy Services, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Select Energy Services||0||2||6||0||2.75|
Archrock presently has a consensus price target of $13.13, suggesting a potential upside of 48.31%. Select Energy Services has a consensus price target of $19.38, suggesting a potential upside of 45.13%. Given Archrock’s higher possible upside, equities research analysts clearly believe Archrock is more favorable than Select Energy Services.
Insider & Institutional Ownership
91.8% of Archrock shares are held by institutional investors. Comparatively, 43.0% of Select Energy Services shares are held by institutional investors. 2.5% of Archrock shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Earnings and Valuation
This table compares Archrock and Select Energy Services’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Archrock||$794.66 million||0.79||$18.95 million||$0.25||35.40|
|Select Energy Services||$692.49 million||2.05||-$12.56 million||($0.51)||-26.18|
Archrock has higher revenue and earnings than Select Energy Services. Select Energy Services is trading at a lower price-to-earnings ratio than Archrock, indicating that it is currently the more affordable of the two stocks.
Archrock pays an annual dividend of $0.48 per share and has a dividend yield of 5.4%. Select Energy Services does not pay a dividend. Archrock pays out 192.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Archrock beats Select Energy Services on 8 of the 14 factors compared between the two stocks.
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.
About Select Energy Services
Select Energy Services, Inc. is a holding company. The Company is provider of total water solutions to the United States unconventional oil and gas industry. The Company is engaged in sourcing and transfer of water prior to its use in drilling and completion activities associated with hydraulic fracturing or fracking, which collectively referrd to as pre-frac water services. The Company provides its services to integrated and exploration and production (E&P) companies. Its operating segments include water solutions, accommodation and rentals, and wellsite completion and constructive services. The Company’s services include water sourcing, water transfer, water treatment, fluid handling, disposal solutions, accommodations, rentals, and wellsite construction. The Company also provides complementary water-related services that support oil and gas well completion and production activities including containment, monitoring, treatment, flowback, hauling and disposal.
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