Unit (NYSE:UNT) and Approach Resources (NASDAQ:AREX) are both small-cap oils/energy companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, valuation, dividends and analyst recommendations.
Earnings & Valuation
This table compares Unit and Approach Resources’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Unit||$739.64 million||1.38||$117.84 million||$0.54||34.98|
|Approach Resources||$105.35 million||1.10||-$112.35 million||($0.36)||-3.42|
Unit has higher revenue and earnings than Approach Resources. Approach Resources is trading at a lower price-to-earnings ratio than Unit, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current recommendations and price targets for Unit and Approach Resources, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Unit currently has a consensus price target of $26.17, indicating a potential upside of 38.52%. Approach Resources has a consensus price target of $3.00, indicating a potential upside of 143.90%. Given Approach Resources’ higher possible upside, analysts plainly believe Approach Resources is more favorable than Unit.
Institutional & Insider Ownership
89.9% of Unit shares are held by institutional investors. Comparatively, 72.2% of Approach Resources shares are held by institutional investors. 3.3% of Unit shares are held by company insiders. Comparatively, 5.0% of Approach Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
This table compares Unit and Approach Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & Risk
Unit has a beta of 2.85, indicating that its stock price is 185% more volatile than the S&P 500. Comparatively, Approach Resources has a beta of 2.79, indicating that its stock price is 179% more volatile than the S&P 500.
Unit beats Approach Resources on 8 of the 11 factors compared between the two stocks.
Unit Company Profile
Unit Corporation, together with its subsidiaries, operates as a diversified energy company in the United States. The company operates through three segments: Oil and Natural Gas, Contract Drilling, and Mid-Stream. The Oil and Natural Gas segment acquires, explores, develops, and produces oil and natural gas properties. It operates approximately 6,500 wells; and has a reserve base of 150 million barrels of oil equivalent primarily in Oklahoma and Texas. The Contract Drilling segment is involved in the contract drilling of onshore oil and natural gas wells for its own account, as well as for a range of other oil and natural gas companies, primarily in the Rocky Mountain and Mid-Continent regions. It has 96 drilling rigs in its fleet. The Mid-Stream segment buys, sells, gathers, processes, and treats natural gas for third parties and for its own account. This segment operates 3 natural gas treatment plants, 14 processing plants, 22 gathering systems, and approximately 1,460 miles of pipeline in Oklahoma, Texas, Kansas, Pennsylvania, and West Virginia. Unit Corporation was founded in 1963 and is headquartered in Tulsa, Oklahoma.
Approach Resources Company Profile
Approach Resources, Inc., an independent energy company, focuses on the acquisition, exploration, development, and production of unconventional oil and gas reserves in the United States. The company's properties are primarily located in the Permian Basin in west Texas. It also owns interests in east Texas Basin. As of December 31, 2017, its estimated proved reserves were 181.5 million barrels of oil equivalent located in Crockett and Schleicher counties, Texas. The company also owned and operated 813 producing oil and gas wells in the Permian Basin. Approach Resources, Inc. was incorporated in 2002 and is headquartered in Fort Worth, Texas.
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