Head-To-Head Review: Archrock (NYSE:AROC) & Weatherford International (NASDAQ:WFRD)

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

Dividends

Archrock pays an annual dividend of $0.84 per share and has a dividend yield of 3.3%. Weatherford International pays an annual dividend of $1.00 per share and has a dividend yield of 1.4%. Archrock pays out 63.6% of its earnings in the form of a dividend. Weatherford International pays out 18.1% 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. Archrock has raised its dividend for 3 consecutive years. Archrock is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

95.5% of Archrock shares are held by institutional investors. Comparatively, 97.2% of Weatherford International shares are held by institutional investors. 2.6% of Archrock shares are held by company insiders. Comparatively, 2.1% of Weatherford International shares are held 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Archrock	18.43%	20.40%	6.81%
Weatherford International	8.15%	28.28%	7.85%

Analyst Ratings

This is a breakdown of recent recommendations for Archrock and Weatherford International, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Archrock	0	1	7	1	3.00
Weatherford International	0	2	8	1	2.91

Archrock currently has a consensus target price of $31.50, indicating a potential upside of 24.06%. Weatherford International has a consensus target price of $91.33, indicating a potential upside of 25.89%. Given Weatherford International’s higher probable upside, analysts plainly believe Weatherford International is more favorable than Archrock.

Risk and Volatility

Archrock has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Weatherford International has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Earnings & Valuation

This table compares Archrock and Weatherford International”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Archrock	$1.16 billion	3.86	$172.23 million	$1.32	19.23
Weatherford International	$5.51 billion	0.94	$506.00 million	$5.52	13.14

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

Summary

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

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.

About Weatherford International

Weatherford International plc, an energy services company, provides equipment and services for the drilling, evaluation, completion, production, and intervention of oil, geothermal, and natural gas wells worldwide. The company operates through three segments: Drilling and Evaluation; Well Construction and Completions; and Production and Intervention. It offers artificial lift systems, including reciprocating rod, progressing cavity pumping, gas, hydraulic, plunger, and hybrid lift systems, as well as related automation and control systems; pressure pumping and reservoir stimulation services, such as acidizing, fracturing, cementing, and coiled-tubing intervention; and software, automation and flow measurement solutions. The company also provides safety, downhole reservoir monitoring, flow control, and multistage fracturing systems, as well as sand-control technologies, and production and isolation packers; liner hangers to suspend a casing string in high-temperature and high-pressure wells; cementing products, including plugs, float and stage equipment, and torque-and-drag reduction technology for zonal isolation; and pre-job planning and installation services. In addition, it offers directional drilling services, and logging and measurement services while drilling; services related to rotary-steerable systems, high temperature and high pressure sensors, drilling reamers, and circulation subs; rotating control devices and advanced automated control systems, as well as closed loop drilling, air drilling, managed-pressure drilling, and underbalanced drilling services; open-hole and cased-hole logging services; and intervention and remediation services. Further, it provides tubular handling, management, and connection services; and re-entry, fishing, and well abandonment services, as well as patented bottom hole, tubular-handling equipment, pressure-control equipment, and drill pipe and collars. The company was incorporated in 1972 and is based in Houston, Texas.