Financial Contrast: Ranger Energy Services (NYSE:RNGR) and Cactus (NYSE:WHD)

Ranger Energy Services (NYSE:RNGR) and Cactus (NYSE:WHD) are both energy companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Institutional and Insider Ownership

68.1% of Ranger Energy Services shares are owned by institutional investors. Comparatively, 85.1% of Cactus shares are owned by institutional investors. 2.8% of Ranger Energy Services shares are owned by company insiders. Comparatively, 12.9% of Cactus shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Ranger Energy Services and Cactus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ranger Energy Services	2.36%	4.87%	3.33%
Cactus	6.01%	16.66%	10.81%

Volatility & Risk

Ranger Energy Services has a beta of 0.12, suggesting that its share price is 88% less volatile than the S&P 500. Comparatively, Cactus has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500.

Dividends

Ranger Energy Services pays an annual dividend of $0.24 per share and has a dividend yield of 1.4%. Cactus pays an annual dividend of $0.56 per share and has a dividend yield of 0.8%. Ranger Energy Services pays out 40.0% of its earnings in the form of a dividend. Cactus pays out 47.9% 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. Ranger Energy Services has increased its dividend for 2 consecutive years and Cactus has increased its dividend for 4 consecutive years. Ranger Energy Services is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations for Ranger Energy Services and Cactus, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ranger Energy Services	0	2	1	0	2.33
Cactus	0	4	3	0	2.43

Ranger Energy Services currently has a consensus price target of $20.00, suggesting a potential upside of 16.69%. Cactus has a consensus price target of $66.80, suggesting a potential downside of 4.16%. Given Ranger Energy Services’ higher probable upside, analysts plainly believe Ranger Energy Services is more favorable than Cactus.

Valuation and Earnings

This table compares Ranger Energy Services and Cactus”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ranger Energy Services	$606.70 million	0.66	$12.30 million	$0.60	28.57
Cactus	$1.08 billion	5.18	$166.01 million	$1.17	59.57

Cactus has higher revenue and earnings than Ranger Energy Services. Ranger Energy Services is trading at a lower price-to-earnings ratio than Cactus, indicating that it is currently the more affordable of the two stocks.

Summary

Cactus beats Ranger Energy Services on 14 of the 17 factors compared between the two stocks.

About Ranger Energy Services

Ranger Energy Services, Inc. provides onshore high specification well service rigs, wireline services, and complementary services to exploration and production companies in the United States. It operates through three segments: High Specification Rigs, Wireline Services, and Processing Solutions and Ancillary Services. The High Specification Rigs segment offers well service rigs and complementary equipment and services to facilitate operations throughout the lifecycle of a well; and well maintenance services. This segment also has a fleet of 402 well service rigs. The Wireline Services segment provides wireline production and intervention services to provide information to identify and resolve well production problems through cased hole logging, perforating, mechanical, and pipe recovery services; wireline completion services that are used primarily for pump down perforating operations to create perforations or entry holes through the production casing; and pumping services. This segment also has a fleet of 66 wireline units and 29 high-pressure pump trucks. The Processing Solutions and Ancillary Services segment rents well service-related equipment consisting of fluid pumps, power swivels, well control packages, hydraulic catwalks, frac tanks, pipe racks, and pipe handling tools; and coiled tubing, decommissioning, and snubbing services, as well as provides proprietary and modular equipment for the processing of natural gas streams. This segment also engages in the rental, installation, commissioning, start up, operation, and maintenance of mechanical refrigeration units, nitrogen gas liquid stabilizer units, nitrogen gas liquid storage units, and related equipment. Ranger Energy Services, Inc. was incorporated in 2017 and is headquartered in Houston, Texas.

About Cactus

Cactus, Inc., together with its subsidiaries, designs, manufactures, sells, and leases pressure control and spoolable pipes in the United States, Australia, Canada, the Middle East, and internationally. It operates through two segments, Pressure Control and Spoolable Technologies. The Pressure Control segment designs, manufactures, sells, and rents a range of wellhead and pressure control equipment under the Cactus Wellhead brand name through service centers. Its products are sold and rented primarily for onshore unconventional oil and gas wells for drilling, completion, and production phases of the wells. This segment also provides field services to install, maintain, and handle the equipment. The Spoolable Technologies segment designs, manufactures, and sells spoolable pipes and associated end fittings under the FlexSteel brand name. Its products are primarily used to transport oil, gas, and other liquids. This segment also provides field services and rental items through service centers and pipe yards, as well as offers equipment and services internationally. In addition, the company offers repair and refurbishment services. Cactus, Inc. was founded in 2011 and is headquartered in Houston, Texas.