Contrasting Arc Resources (OTCMKTS:AETUF) & Murphy Oil (NYSE:MUR)

Arc Resources (OTCMKTS:AETUF) and Murphy Oil (NYSE:MUR) are both energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.

Valuation and Earnings

This table compares Arc Resources and Murphy Oil”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arc Resources	$4.35 billion	3.20	$912.59 million	$1.79	13.71
Murphy Oil	$2.72 billion	2.31	$104.23 million	$2.02	21.71

Arc Resources has higher revenue and earnings than Murphy Oil. Arc Resources is trading at a lower price-to-earnings ratio than Murphy Oil, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations for Arc Resources and Murphy Oil, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arc Resources	1	10	2	0	2.08
Murphy Oil	2	8	4	1	2.27

Murphy Oil has a consensus target price of $39.75, indicating a potential downside of 9.35%. Given Murphy Oil’s stronger consensus rating and higher probable upside, analysts plainly believe Murphy Oil is more favorable than Arc Resources.

Risk and Volatility

Arc Resources has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500. Comparatively, Murphy Oil has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.

Profitability

This table compares Arc Resources and Murphy Oil’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arc Resources	19.75%	16.67%	9.09%
Murphy Oil	9.74%	6.63%	3.51%

Institutional & Insider Ownership

2.5% of Arc Resources shares are held by institutional investors. Comparatively, 78.3% of Murphy Oil shares are held by institutional investors. 0.3% of Arc Resources shares are held by company insiders. Comparatively, 5.8% of Murphy Oil shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Arc Resources pays an annual dividend of $0.59 per share and has a dividend yield of 2.4%. Murphy Oil pays an annual dividend of $1.40 per share and has a dividend yield of 3.2%. Arc Resources pays out 33.0% of its earnings in the form of a dividend. Murphy Oil pays out 69.3% 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. Murphy Oil has raised its dividend for 5 consecutive years. Murphy Oil is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Murphy Oil beats Arc Resources on 11 of the 18 factors compared between the two stocks.

About Arc Resources

ARC Resources Ltd. engages in the acquiring and developing crude oil, natural gas, condensate, and natural gas liquids in Canada. It primarily holds interests in the Montney basin located in Alberta and northeast British Columbia. ARC Resources Ltd. was founded in 1996 and is based in Calgary, Canada.

About Murphy Oil

Murphy Oil Corporation, together with its subsidiaries, operates as an oil and gas exploration and production company in the United States, Canada, and internationally. It explores for and produces crude oil, natural gas, and natural gas liquids. The company was formerly known as Murphy Corporation and changed its name to Murphy Oil Corporation in 1964. The company was incorporated in 1950 and is headquartered in Houston, Texas.