Denbury Resources (NYSE: DNR) and Approach Resources (NASDAQ:AREX) are both small-cap energy companies, but which is the better investment? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, earnings, analyst recommendations and profitability.
Valuation and Earnings
This table compares Denbury Resources and Approach Resources’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Denbury Resources||$975.60 million||0.89||-$976.17 million||($0.90)||-2.39|
|Approach Resources||$90.30 million||2.83||-$52.24 million||($2.52)||-1.17|
Approach Resources has lower revenue, but higher earnings than Denbury Resources. Denbury Resources is trading at a lower price-to-earnings ratio than Approach Resources, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent recommendations and price targets for Denbury Resources and Approach Resources, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Denbury Resources presently has a consensus price target of $2.17, suggesting a potential upside of 0.78%. Approach Resources has a consensus price target of $2.80, suggesting a potential downside of 5.08%. Given Denbury Resources’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Denbury Resources is more favorable than Approach Resources.
This table compares Denbury Resources and Approach Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & Risk
Denbury Resources has a beta of 3.49, indicating that its share price is 249% more volatile than the S&P 500. Comparatively, Approach Resources has a beta of 2.71, indicating that its share price is 171% more volatile than the S&P 500.
Insider and Institutional Ownership
80.0% of Denbury Resources shares are held by institutional investors. Comparatively, 23.4% of Approach Resources shares are held by institutional investors. 1.2% of Denbury Resources 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 hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Denbury Resources beats Approach Resources on 10 of the 14 factors compared between the two stocks.
Denbury Resources Company Profile
Denbury Resources Inc. is an independent oil and natural gas company. The Company’s operations are focused in two operating areas: the Gulf Coast and Rocky Mountain regions. Its properties with proved and producing reserves in the Gulf Coast region are situated in Mississippi, Texas, Louisiana and Alabama, and in the Rocky Mountain region are situated in Montana, North Dakota and Wyoming. It had an estimated proved oil and natural gas reserves of 254.5 million barrels of oil equivalent (MMBOE) as of December 31, 2016. Its primary Gulf Coast carbon dioxide (CO2) source is Jackson Dome, which is located near Jackson, Mississippi. Its mature group of properties includes the initial CO2 field, Little Creek, and other fields, including Brookhaven, Cranfield, Eucutta, Lockhart Crossing, Mallalieu and Soso fields. Its LaBarge Field is located in southwestern Wyoming. Its Riley Ridge Federal Unit is located in southwestern Wyoming and produces gas from the same LaBarge Field.
Approach Resources Company Profile
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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