Critical Review: RPC (NYSE:RES) vs. Ranger Energy Services (NYSE:RNGR)

RPC (NYSE:RES) and Ranger Energy Services (NYSE:RNGR) are both small-cap energy companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, earnings, risk, profitability, analyst recommendations, institutional ownership and dividends.

Valuation & Earnings

This table compares RPC and Ranger Energy Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RPC	$1.63 billion	0.76	$32.08 million	($0.17)	-33.03
Ranger Energy Services	$546.90 million	0.54	$12.30 million	$0.65	19.28

RPC has higher revenue and earnings than Ranger Energy Services. RPC is trading at a lower price-to-earnings ratio than Ranger Energy Services, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

RPC has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500. Comparatively, Ranger Energy Services has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500.

Dividends

RPC pays an annual dividend of $0.16 per share and has a dividend yield of 2.8%. Ranger Energy Services pays an annual dividend of $0.24 per share and has a dividend yield of 1.9%. RPC pays out -94.1% of its earnings in the form of a dividend. Ranger Energy Services pays out 36.9% 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. Ranger Energy Services has increased its dividend for 2 consecutive years. RPC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and target prices for RPC and Ranger Energy Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RPC	3	2	1	0	1.67
Ranger Energy Services	0	2	1	0	2.33

RPC presently has a consensus price target of $5.67, suggesting a potential upside of 0.92%. Ranger Energy Services has a consensus price target of $20.00, suggesting a potential upside of 59.63%. Given Ranger Energy Services’ stronger consensus rating and higher probable upside, analysts clearly believe Ranger Energy Services is more favorable than RPC.

Profitability

This table compares RPC and Ranger Energy Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RPC	-1.77%	5.26%	3.97%
Ranger Energy Services	2.44%	5.17%	3.48%

Institutional & Insider Ownership

41.1% of RPC shares are held by institutional investors. Comparatively, 68.1% of Ranger Energy Services shares are held by institutional investors. 58.8% of RPC shares are held by insiders. Comparatively, 2.8% of Ranger Energy Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

RPC beats Ranger Energy Services on 9 of the 16 factors compared between the two stocks.

About RPC

RPC, Inc. is an oilfield services company that provides specialized equipment and services to exploration and production companies. Its offerings support the drilling, completion, maintenance and enhancement of oil and natural gas wells. The company’s services include pressure pumping, coiled tubing, wireline, downhole tools, well control and related well-intervention work. RPC also provides equipment rental and other technical services used in oilfield operations. Founded in 1984 and headquartered in Atlanta, Georgia, RPC serves customers primarily in the United States, along with selected international markets.

About Ranger Energy Services

Ranger Energy Services, Inc. provides well service and related services to the U.S. oil and gas industry. Its work focuses on maintaining, repairing and improving existing wells, as well as supporting well completion and production activities. The company’s services include high-specification well service rigs, wireline services and ancillary offerings such as equipment rentals and other field services. These capabilities support well intervention, maintenance and production operations. Ranger serves customers in major onshore oil and gas regions across the United States.