Contrasting Archrock (NYSE:AROC) & Halliburton (HAL)

Halliburton (NYSE: HAL) and Archrock (NYSE:AROC) are both oils/energy companies, but which is the better business? We will compare the two businesses based on the strength of their risk, profitability, earnings, dividends, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a breakdown of recent ratings for Halliburton and Archrock, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Halliburton 0 2 23 0 2.92
Archrock 0 6 1 0 2.14

Halliburton currently has a consensus price target of $56.85, suggesting a potential upside of 29.53%. Archrock has a consensus price target of $13.15, suggesting a potential upside of 28.92%. Given Halliburton’s stronger consensus rating and higher possible upside, research analysts plainly believe Halliburton is more favorable than Archrock.

Profitability

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

Net Margins Return on Equity Return on Assets
Halliburton 1.13% 6.93% 2.47%
Archrock -8.62% -2.93% -0.83%

Institutional and Insider Ownership

80.0% of Halliburton shares are held by institutional investors. Comparatively, 90.3% of Archrock shares are held by institutional investors. 0.5% of Halliburton shares are held by company insiders. Comparatively, 2.5% of Archrock shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Halliburton pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. Archrock pays an annual dividend of $0.48 per share and has a dividend yield of 4.7%. Halliburton pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Archrock pays out -49.5% of its earnings in the form of a dividend. Archrock is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Halliburton and Archrock’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Halliburton $15.89 billion 2.41 -$5.76 billion $0.24 182.88
Archrock $807.07 million 0.90 -$54.55 million ($0.97) -10.52

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

Volatility & Risk

Halliburton has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Archrock has a beta of 3.33, suggesting that its stock price is 233% more volatile than the S&P 500.

Summary

Halliburton beats Archrock on 9 of the 15 factors compared between the two stocks.

About Halliburton

Halliburton Company provides services and products to the upstream oil and natural gas industry throughout the lifecycle of the reservoir, from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production throughout the life of the field. It operates through two segments: the Completion and Production segment, and the Drilling and Evaluation segment. The Completion and Production segment delivers cementing, stimulation, intervention, pressure control, specialty chemicals, artificial lift and completion services. The Drilling and Evaluation segment provides field and reservoir modeling, drilling, evaluation and wellbore placement solutions that enable customers to model, measure, drill and optimize their well construction activities. It serves national and independent oil and natural gas companies. As of December 31, 2016, it had conducted business in approximately 70 countries around the world.

About Archrock

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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