Reviewing Archrock (AROC) & Core Laboratories (CLB)

Archrock (NYSE: AROC) and Core Laboratories (NYSE:CLB) are both energy companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.

Valuation and Earnings

This table compares Archrock and Core Laboratories’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Archrock $807.07 million 0.95 -$54.55 million ($0.97) -10.31
Core Laboratories $594.74 million 8.63 $63.89 million $1.73 67.23

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

Insider and Institutional Ownership

83.4% of Archrock shares are owned by institutional investors. 2.5% of Archrock shares are owned by company insiders. Comparatively, 1.0% of Core Laboratories shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Archrock pays an annual dividend of $0.48 per share and has a dividend yield of 4.8%. Core Laboratories pays an annual dividend of $2.20 per share and has a dividend yield of 1.9%. Archrock pays out -49.5% of its earnings in the form of a dividend. Core Laboratories pays out 127.2% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current ratings and target prices for Archrock and Core Laboratories, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Archrock 0 6 1 0 2.14
Core Laboratories 0 6 5 0 2.45

Archrock currently has a consensus price target of $13.35, suggesting a potential upside of 33.50%. Core Laboratories has a consensus price target of $111.33, suggesting a potential downside of 4.27%. Given Archrock’s higher probable upside, research analysts clearly believe Archrock is more favorable than Core Laboratories.

Profitability

This table compares Archrock and Core Laboratories’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Archrock -8.62% -2.93% -0.83%
Core Laboratories 12.06% 52.89% 13.98%

Risk and Volatility

Archrock has a beta of 3.34, indicating that its share price is 234% more volatile than the S&P 500. Comparatively, Core Laboratories has a beta of 1.56, indicating that its share price is 56% more volatile than the S&P 500.

Summary

Core Laboratories beats Archrock on 9 of the 16 factors compared between the two stocks.

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.

Core Laboratories Company Profile

Core Laboratories N.V. provides reservoir description, production enhancement and reservoir management services to the oil and gas industry. The Company operates through three segments: Reservoir Description, Production Enhancement and Reservoir Management. The Reservoir Description segment encompasses the characterization of petroleum reservoir rock, fluid and gas samples. It provides analytical and field services to characterize properties of crude oil and petroleum products to the oil and gas industry. The Production Enhancement segment includes products and services relating to reservoir well completions, perforations, stimulations and production. It provides integrated diagnostic services to evaluate the effectiveness of well completions. The Reservoir Management segment combines and integrates information from reservoir description and production enhancement services to increase production and recovery of oil and gas from its clients’ reservoirs.

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