Reviewing Archrock (NYSE:AROC) and Helmerich & Payne (NYSE:HP)

Helmerich & Payne (NYSE:HP) and Archrock (NYSE:AROC) are both mid-cap energy companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, risk, dividends, valuation and profitability.

Institutional and Insider Ownership

96.1% of Helmerich & Payne shares are held by institutional investors. Comparatively, 95.5% of Archrock shares are held by institutional investors. 4.4% of Helmerich & Payne shares are held by company insiders. Comparatively, 2.9% of Archrock shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Helmerich & Payne and Archrock”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Helmerich & Payne	$3.75 billion	0.99	-$163.70 million	($1.41)	-26.34
Archrock	$1.49 billion	3.19	$322.29 million	$1.94	13.99

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

Dividends

Helmerich & Payne pays an annual dividend of $1.00 per share and has a dividend yield of 2.7%. Archrock pays an annual dividend of $0.92 per share and has a dividend yield of 3.4%. Helmerich & Payne pays out -70.9% of its earnings in the form of a dividend. Archrock pays out 47.4% 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 increased its dividend for 3 consecutive years. Archrock is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Helmerich & Payne and Archrock, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Helmerich & Payne	2	4	7	0	2.38
Archrock	0	1	9	0	2.90

Helmerich & Payne presently has a consensus price target of $44.36, indicating a potential upside of 19.47%. Archrock has a consensus price target of $42.12, indicating a potential upside of 55.26%. Given Archrock’s stronger consensus rating and higher probable upside, analysts clearly believe Archrock is more favorable than Helmerich & Payne.

Profitability

This table compares Helmerich & Payne and Archrock’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Helmerich & Payne	-3.43%	-2.35%	-0.99%
Archrock	22.89%	22.33%	7.79%

Volatility and Risk

Helmerich & Payne has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500. Comparatively, Archrock has a beta of 0.96, indicating that its stock price is 4% less volatile than the S&P 500.

Summary

Archrock beats Helmerich & Payne on 13 of the 17 factors compared between the two stocks.

About Helmerich & Payne

Helmerich & Payne, Inc. is a drilling contractor that provides services and technology to oil and natural gas companies. Founded in 1920 and headquartered in Tulsa, Oklahoma, the company has a long history in the drilling industry. Its operations include contract drilling with land rigs, offshore platform rigs and related drilling solutions. The company is known for its FlexRig fleet and also offers technologies and services designed to support drilling performance and efficiency. Helmerich & Payne serves customers in the United States and international markets.

About Archrock

Archrock, Inc. provides natural gas compression services to companies in the oil and natural gas industry. Its equipment helps move natural gas from wells through gathering systems and pipelines, supporting production and transportation. The company’s contract operations include supplying, operating and maintaining compression equipment at customer sites. Through its aftermarket services business, Archrock provides maintenance, repair and other support for compression equipment, including units it did not originally supply.