Analyzing Arc Resources (OTCMKTS:AETUF) and Teekay Tankers (NYSE:TNK)

Arc Resources (OTCMKTS:AETUF) and Teekay Tankers (NYSE:TNK) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Dividends

Arc Resources pays an annual dividend of $0.59 per share and has a dividend yield of 2.4%. Teekay Tankers pays an annual dividend of $1.00 per share and has a dividend yield of 1.0%. Arc Resources pays out 33.0% of its earnings in the form of a dividend. Teekay Tankers pays out 5.9% 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. Teekay Tankers has raised its dividend for 2 consecutive years.

Institutional & Insider Ownership

2.5% of Arc Resources shares are owned by institutional investors. Comparatively, 52.7% of Teekay Tankers shares are owned by institutional investors. 0.3% of Arc Resources shares are owned by company insiders. Comparatively, 1.9% of Teekay Tankers shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

Arc Resources has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500. Comparatively, Teekay Tankers has a beta of -0.19, suggesting that its share price is 119% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Arc Resources and Teekay Tankers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arc Resources	1	10	3	0	2.14
Teekay Tankers	1	3	3	1	2.50

Teekay Tankers has a consensus price target of $77.00, indicating a potential downside of 22.42%. Given Teekay Tankers’ stronger consensus rating and higher probable upside, analysts plainly believe Teekay Tankers is more favorable than Arc Resources.

Profitability

This table compares Arc Resources and Teekay Tankers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arc Resources	19.75%	16.67%	9.09%
Teekay Tankers	51.35%	22.11%	20.23%

Valuation and Earnings

This table compares Arc Resources and Teekay Tankers”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arc Resources	$4.35 billion	3.20	$912.59 million	$1.79	13.71
Teekay Tankers	$951.80 million	3.60	$351.19 million	$16.97	5.85

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

Summary

Teekay Tankers beats Arc Resources on 12 of the 17 factors compared between the two stocks.

About Arc Resources

ARC Resources Ltd. engages in the acquiring and developing crude oil, natural gas, condensate, and natural gas liquids in Canada. It primarily holds interests in the Montney basin located in Alberta and northeast British Columbia. ARC Resources Ltd. was founded in 1996 and is based in Calgary, Canada.

About Teekay Tankers

Teekay Tankers Ltd. provides crude oil and other marine transportation services to oil industries in Bermuda and internationally. The company offers voyage and time charter services; offshore ship-to-ship transfer services of commodities primarily crude oil and refined oil products; and tanker commercial and technical management services. It also engages management of vessels, procurement, and equipment rental businesses. Teekay Tankers Ltd. was incorporated in 2007 and is headquartered in Hamilton, Bermuda.