Critical Analysis: Archrock (NYSE:AROC) and Tidewater (NYSE:TDW)

Archrock (NYSE:AROC) and Tidewater (NYSE:TDW) are both mid-cap energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, profitability, valuation, dividends and risk.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Archrock and Tidewater, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Archrock	1	0	9	0	2.80
Tidewater	0	6	3	1	2.50

Archrock currently has a consensus target price of $42.29, indicating a potential upside of 37.49%. Tidewater has a consensus target price of $98.25, indicating a potential upside of 14.19%. Given Archrock’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Archrock is more favorable than Tidewater.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Archrock	21.84%	22.22%	7.56%
Tidewater	18.34%	5.36%	3.05%

Volatility & Risk

Archrock has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, Tidewater has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.

Insider and Institutional Ownership

95.4% of Archrock shares are held by institutional investors. Comparatively, 95.1% of Tidewater shares are held by institutional investors. 2.9% of Archrock shares are held by company insiders. Comparatively, 5.9% of Tidewater shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Archrock and Tidewater”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Archrock	$1.50 billion	3.58	$322.29 million	$1.86	16.54
Tidewater	$1.35 billion	3.16	$334.66 million	$4.94	17.42

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

Summary

Archrock beats Tidewater on 10 of the 15 factors compared between the two stocks.

About Archrock

Archrock, Inc., together with its subsidiaries, operates as an energy infrastructure company in the United States. The company operates in two segments, Contract Operations and Aftermarket Services. It engages in the designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining of its owned fleet of natural gas compression equipment to provide natural gas compression services. The company also sells over-the-counter parts and components; and provides operations, major and routine maintenance, overhaul, and reconfiguration services to customers who own compression equipment. It serves integrated and independent oil and natural gas processors, gatherers, and transporters. 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 Tidewater

Tidewater Inc., together with its subsidiaries, provides offshore support vessels and marine support services to the offshore energy industry through the operation of a fleet of marine service vessels worldwide. It provides services in support of offshore oil and gas exploration, field development, and production, as well as windfarm development and maintenance, including towing of and anchor handling for mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover, and production activities; offshore construction, and seismic and subsea support; geotechnical survey support for windfarm construction; and various specialized services, such as pipe and cable laying. The company operates anchor handling towing supply vessels, platform supply vessels, crew boats, utility vessels, and offshore tugs. The company serves integrated and independent oil and gas exploration, field development, and production companies; mid-sized and smaller independent exploration and production companies; foreign government-owned or government-controlled organizations, and other related companies; offshore drilling contractors; and other companies, such as offshore construction, windfarm development, diving, and well stimulation companies. Tidewater Inc. was incorporated in 1956 and is headquartered in Houston, Texas.