Tellurian (NASDAQ: TELL) and Approach Resources (NASDAQ:AREX) are both small-cap energy companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, dividends and valuation.
Volatility & Risk
Tellurian has a beta of 1.27, meaning that its stock price is 27% more volatile than the S&P 500. Comparatively, Approach Resources has a beta of 2.72, meaning that its stock price is 172% more volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Tellurian and Approach Resources, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Tellurian currently has a consensus price target of $14.50, suggesting a potential upside of 79.68%. Approach Resources has a consensus price target of $2.80, suggesting a potential upside of 9.80%. Given Tellurian’s stronger consensus rating and higher possible upside, research analysts plainly believe Tellurian is more favorable than Approach Resources.
Earnings and Valuation
This table compares Tellurian and Approach Resources’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Approach Resources||$105.35 million||2.09||-$52.24 million||($1.69)||-1.51|
Tellurian has higher earnings, but lower revenue than Approach Resources. Tellurian is trading at a lower price-to-earnings ratio than Approach Resources, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
13.9% of Tellurian shares are held by institutional investors. Comparatively, 31.3% of Approach Resources shares are held by institutional investors. 48.3% of Tellurian shares are held by company insiders. Comparatively, 5.1% of Approach Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares Tellurian and Approach Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Tellurian beats Approach Resources on 8 of the 14 factors compared between the two stocks.
Tellurian Inc., formerly Magellan Petroleum Corporation, is an oil and gas exploration and production company. The Company focuses on the development of liquefied natural gas (LNG) projects along the United States Gulf Coast through its subsidiary, Tellurian Investments Inc. The Company owns interests in the Horse Hill-1 well and related licenses in the Weald Basin, onshore the United Kingdom, and an exploration block, NT/P82, in the Bonaparte Basin, offshore Northern Territory, Australia. The Horse Hill-1 well has identified prospects from the Portland sandstone and Kimmeridge Clay limestone formations.
About Approach Resources
Approach Resources Inc. is an independent energy company. The Company is focused on the exploration, development, production and acquisition of unconventional oil and gas reserves in the Midland Basin of the greater Permian Basin in West Texas. The Company’s business segment is the exploration and production of oil, natural gas liquids (NGLs) and natural gas. The Company’s assets cover an area of approximately 126,000 net acres. Its proved reserves are approximately 166.6 million barrels of oil equivalent. The Company’s proved reserves are primarily located in Crockett and Schleicher Counties, Texas. The Company’s Permian Basin acreage is known as the Project Pangea. The Company owns and operates approximately 800 producing oil and gas wells in the Permian Basin. The Company, through a joint venture with EnCana Oil & Gas (USA) Inc., holds interests in the approximately 3,000 gross acre project in Limestone and Robertson Counties, Texas, in the East Texas Cotton Valley trend.
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