Contrasting Williams Companies (NYSE:WMB) & Arc Resources (OTCMKTS:AETUF)

Arc Resources (OTCMKTS:AETUF) and Williams Companies (NYSE:WMB) are both large-cap energy companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, valuation, profitability, dividends and risk.

Profitability

This table compares Arc Resources and Williams Companies’ 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%
Williams Companies	24.99%	17.02%	4.56%

Risk and Volatility

Arc Resources has a beta of 0.27, meaning that its share price is 73% less volatile than the S&P 500. Comparatively, Williams Companies has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Earnings and Valuation

This table compares Arc Resources and Williams Companies”s revenue, earnings per share (EPS) 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
Williams Companies	$11.95 billion	7.07	$2.62 billion	$2.54	26.59

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

Analyst Ratings

This is a summary of current ratings for Arc Resources and Williams Companies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arc Resources	1	10	2	0	2.08
Williams Companies	0	2	20	2	3.00

Williams Companies has a consensus price target of $86.33, suggesting a potential upside of 27.82%. Given Williams Companies’ stronger consensus rating and higher possible upside, analysts plainly believe Williams Companies is more favorable than Arc Resources.

Institutional & Insider Ownership

2.5% of Arc Resources shares are held by institutional investors. Comparatively, 86.4% of Williams Companies shares are held by institutional investors. 0.3% of Arc Resources shares are held by insiders. Comparatively, 0.5% of Williams Companies shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company 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%. Williams Companies pays an annual dividend of $2.10 per share and has a dividend yield of 3.1%. Arc Resources pays out 33.0% of its earnings in the form of a dividend. Williams Companies pays out 82.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Williams Companies has raised its dividend for 9 consecutive years. Williams Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Williams Companies beats Arc Resources on 16 of the 18 factors compared between the two stocks.

About Arc Resources

ARC Resources Ltd. is a Canadian energy company that explores for, develops and produces natural gas, condensate, crude oil and other natural gas liquids. Its operations are focused on the Montney formation in Alberta and British Columbia, where the company develops unconventional energy resources. Founded in 1996 and headquartered in Calgary, ARC has built its business around the Montney, a large resource basin spanning parts of western Canada. Its production is marketed to customers in Canada and international markets, including through connections to liquefied natural gas export infrastructure.

About Williams Companies

Williams Companies is an energy infrastructure company focused primarily on gathering, processing, transporting and storing natural gas. Its systems connect natural gas-producing regions with utilities, power generators, industrial customers and other energy markets. The company operates pipelines and related facilities across the United States. Its Transco pipeline system carries natural gas from the Gulf Coast and other supply areas to customers along the East Coast, while its gathering and processing operations serve producers in regions including the Northeast, the West and the Gulf Coast.