Archrock (NYSE:AROC) vs. Kinetik (NYSE:KNTK) Critical Contrast

Kinetik (NYSE:KNTK) and Archrock (NYSE:AROC) are both mid-cap energy companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, institutional ownership, risk, valuation, dividends and profitability.

Dividends

Kinetik pays an annual dividend of $3.12 per share and has a dividend yield of 9.5%. Archrock pays an annual dividend of $0.84 per share and has a dividend yield of 3.6%. Kinetik pays out 742.9% 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 pays out 56.0% of its earnings in the form of a dividend. Kinetik has raised its dividend for 1 consecutive years and Archrock has raised its dividend for 3 consecutive years.

Volatility and Risk

Kinetik has a beta of 3.07, indicating that its share price is 207% more volatile than the S&P 500. Comparatively, Archrock has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500.

Valuation & Earnings

This table compares Kinetik and Archrock”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kinetik	$1.48 billion	3.57	$244.23 million	$0.42	78.07
Archrock	$1.44 billion	2.84	$172.23 million	$1.50	15.55

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Kinetik and Archrock, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kinetik	0	5	7	0	2.58
Archrock	0	1	7	1	3.00

Kinetik presently has a consensus target price of $49.70, suggesting a potential upside of 51.57%. Archrock has a consensus target price of $31.50, suggesting a potential upside of 35.08%. Given Kinetik’s higher probable upside, equities analysts plainly believe Kinetik is more favorable than Archrock.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Kinetik	6.70%	-5.74%	1.81%
Archrock	18.43%	20.40%	6.81%

Insider and Institutional Ownership

21.1% of Kinetik shares are owned by institutional investors. Comparatively, 95.4% of Archrock shares are owned by institutional investors. 3.8% of Kinetik shares are owned by company insiders. Comparatively, 2.6% of Archrock shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Archrock beats Kinetik on 9 of the 17 factors compared between the two stocks.

About Kinetik

Kinetik Holdings Inc. operates as a midstream company in the Texas Delaware Basin. It provides gathering, transportation, compression, processing, and treating services for companies that produce natural gas, natural gas liquids, crude oil, and water. The company is headquartered in Midland, Texas.

About Archrock

Archrock, Inc., together with its subsidiaries, operates as an energy infrastructure company in the United States. The company operates in two segments, Contract Operations and Aftermarket Services. It engages in the designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining of its owned fleet of natural gas compression equipment to provide natural gas compression services. The company also sells over-the-counter parts and components; and provides operations, major and routine maintenance, overhaul, and reconfiguration services to customers who own compression equipment. It serves integrated and independent oil and natural gas processors, gatherers, and transporters. The company was formerly known as Exterran Holdings, Inc. and changed its name to Archrock, Inc. in November 2015. Archrock, Inc. was founded in 1990 and is headquartered in Houston, Texas.