Head to Head Analysis: Archrock (AROC) vs. EQT GP (EQGP)

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Archrock (NYSE: EQGP) and EQT GP (NYSE:EQGP) are both oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, earnings, analyst recommendations, dividends and profitability.

Dividends

Archrock pays an annual dividend of $0.53 per share and has a dividend yield of 4.4%. EQT GP pays an annual dividend of $1.22 per share and has a dividend yield of 5.4%. Archrock pays out -265.0% of its earnings in the form of a dividend. EQT GP pays out 124.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. EQT GP has raised its dividend for 2 consecutive years. EQT GP is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

99.7% of Archrock shares are held by institutional investors. Comparatively, 8.9% of EQT GP shares are held by institutional investors. 2.5% of Archrock shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Archrock and EQT GP’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Archrock $794.66 million 1.95 $18.95 million ($0.20) -60.00
EQT GP $834.10 million 8.12 $261.99 million $0.98 22.86

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

Volatility & Risk

Archrock has a beta of 2.92, suggesting that its stock price is 192% more volatile than the S&P 500. Comparatively, EQT GP has a beta of 1.16, suggesting that its stock price is 16% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Archrock 4.19% 0.45% 0.14%
EQT GP 33.16% 12.65% 6.88%

Analyst Ratings

This is a breakdown of recent ratings and target prices for Archrock and EQT GP, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Archrock 0 2 5 0 2.71
EQT GP 0 9 5 0 2.36

Archrock presently has a consensus target price of $14.63, suggesting a potential upside of 21.88%. EQT GP has a consensus target price of $28.15, suggesting a potential upside of 25.69%. Given EQT GP’s higher probable upside, analysts plainly believe EQT GP is more favorable than Archrock.

Summary

EQT GP beats Archrock on 11 of the 16 factors compared between the two stocks.

About Archrock

Archrock, Inc. engages in the natural gas contract operations services business in the United States. The company provides natural gas compression services to customers in the oil and natural gas industry. It also offers aftermarket services, such as parts and components; and operation, maintenance, overhaul, and reconfiguration services to customers who own compression equipment. 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 EQT GP

EQT GP Holdings, LP owns, operates, acquires, and develops midstream energy assets in the Appalachian Basin through owning partnership interests in EQT Midstream Partners, LP (EQM). The company operates in two segments, Gathering and Transmission. EQM offers natural gas transmission, storage, and gathering services to various third parties in Pennsylvania, West Virginia, and Ohio. As of December 31, 2017, it owned and operated 300 miles of high pressure gathering lines and 1,500 miles of Federal Energy Regulatory Commission (FERC)-regulated low pressure gathering lines. EQT GP Services, LLC serves as a general partner of the company. The company was founded in 2015 and is headquartered in Pittsburgh, Pennsylvania. EQT GP Holdings, LP is a subsidiary of EQT Gathering Holdings, LLC.

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