Basic Energy Services (NYSE: BAS) and Archrock (NYSE:AROC) are both small-cap oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Analyst Ratings

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This is a summary of recent recommendations and price targets for Basic Energy Services and Archrock, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Basic Energy Services 0 4 4 0 2.50
Archrock 0 4 4 0 2.50

Basic Energy Services currently has a consensus price target of $29.36, indicating a potential upside of 89.16%. Archrock has a consensus price target of $13.29, indicating a potential upside of 42.16%. Given Basic Energy Services’ higher possible upside, equities research analysts plainly believe Basic Energy Services is more favorable than Archrock.

Profitability

This table compares Basic Energy Services and Archrock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Basic Energy Services -11.19% -16.12% -7.15%
Archrock 2.39% -2.31% -0.67%

Risk and Volatility

Basic Energy Services has a beta of 2.66, suggesting that its share price is 166% more volatile than the S&P 500. Comparatively, Archrock has a beta of 2.92, suggesting that its share price is 192% more volatile than the S&P 500.

Valuation and Earnings

This table compares Basic Energy Services and Archrock’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Basic Energy Services $864.04 million 0.47 -$96.67 million ($3.72) -4.17
Archrock $794.66 million 0.84 $18.95 million $0.25 37.48

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

Dividends

Archrock pays an annual dividend of $0.48 per share and has a dividend yield of 5.1%. Basic Energy Services does not pay a dividend. Archrock pays out 192.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

91.8% of Archrock shares are owned by institutional investors. 0.7% of Basic Energy Services shares are owned by company insiders. Comparatively, 2.5% of Archrock shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Archrock beats Basic Energy Services on 11 of the 14 factors compared between the two stocks.

Basic Energy Services Company Profile

Basic Energy Services, Inc. provides a range of well site services in the United States to oil and natural gas drilling and producing companies, including completion and remedial services, fluid services, well servicing and contract drilling. The Company operates through the segment, which include Completion and Remedial Services, Fluid Services, Well Servicing and Contract Drilling. The Company’s operations are managed regionally and are concentrated in the United States onshore oil and natural gas producing regions located in Texas, New Mexico, Oklahoma, Arkansas, Kansas, Louisiana, Wyoming, North Dakota, Colorado, Utah, Montana, West Virginia, California, Ohio and Pennsylvania. Its operations are focused on liquids-rich basins, as well as natural gas-focused shale plays characterized by prolific reserves. It has a presence in the Permian Basin and the Bakken, Eagle Ford, Haynesville and Marcellus shales.

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.

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