Approach Resources (NASDAQ:AREX) and PETROLEO BRASIL/S (NYSE:PBR.A) are both oils/energy companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Analyst Recommendations

This is a summary of current recommendations for Approach Resources and PETROLEO BRASIL/S, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Approach Resources 2 0 0 0 1.00
PETROLEO BRASIL/S 0 0 0 0 N/A

Approach Resources presently has a consensus price target of $0.40, indicating a potential upside of 3,233.33%. Given Approach Resources’ higher probable upside, equities research analysts clearly believe Approach Resources is more favorable than PETROLEO BRASIL/S.

Valuation and Earnings

This table compares Approach Resources and PETROLEO BRASIL/S’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Approach Resources $114.04 million 0.01 -$19.91 million ($0.26) -0.05
PETROLEO BRASIL/S $95.58 billion 0.93 $7.17 billion N/A N/A

PETROLEO BRASIL/S has higher revenue and earnings than Approach Resources.

Insider & Institutional Ownership

60.8% of Approach Resources shares are owned by institutional investors. Comparatively, 4.2% of PETROLEO BRASIL/S shares are owned by institutional investors. 2.1% of Approach Resources shares are owned by company insiders. Comparatively, 1.0% of PETROLEO BRASIL/S shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Approach Resources and PETROLEO BRASIL/S’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Approach Resources -38.00% -5.64% -2.99%
PETROLEO BRASIL/S 10.45% 10.41% 3.35%

Risk and Volatility

Approach Resources has a beta of 3.17, indicating that its share price is 217% more volatile than the S&P 500. Comparatively, PETROLEO BRASIL/S has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500.

Summary

PETROLEO BRASIL/S beats Approach Resources on 7 of the 11 factors compared between the two stocks.

Approach Resources Company Profile

Approach Resources, Inc., an independent energy company, focuses on the acquisition, exploration, development, and production of unconventional oil and gas reserves. The company's properties are primarily located in the Permian Basin in west Texas. It also owns interests in east Texas Basin. As of December 31, 2018, its estimated proved reserves were 180.1 million barrels of oil equivalent located in Crockett and Schleicher counties, Texas. The company also owned and operated 813 producing oil and gas wells in the Permian Basin. Approach Resources, Inc. was incorporated in 2002 and is headquartered in Fort Worth, Texas.

PETROLEO BRASIL/S Company Profile

PetrĂ³leo Brasileiro S.A. – Petrobras operates in the oil, natural gas, and energy industries in Brazil and internationally. It engages in prospecting, drilling, refining, processing, trading, and transporting crude oil from producing onshore and offshore oil fields and shale or other rocks, as well as oil products, natural gas, and other liquid hydrocarbons. The company's Exploration and Production segment engages in the exploration, development, and production of crude oil, natural gas liquids, and natural gas primarily for supplies to the its domestic refineries. Its Refining, Transportation and Marketing segment is involved in the refining, logistics, transport, and trading of crude oil and oil products; exportation of ethanol; and extraction and processing of shale, as well as holding interests in petrochemical companies. The company's Gas and Power segment engages in the logistic and trading of natural gas and liquid natural gas; generation of electricity through thermoelectric power plants; holding interests in transportation and distribution of natural gas; and fertilizer business operations. Its Biofuels segment is involved in the production of biodiesel and its co-products, as well as production and trading of ethanol, sugar, and electric power generated from sugarcane bagasse. The company's Distribution segment sells oil products, including gasoline and diesel; ethanol; and vehicle natural gas, as well as distributes oil products in South America. PetrĂ³leo Brasileiro S.A. – Petrobras was founded in 1953 and is headquartered in Rio de Janeiro, Brazil.

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