Analyzing BP (NYSE:BP) & Arc Resources (OTCMKTS:AETUF)

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

Insider and Institutional Ownership

2.5% of Arc Resources shares are owned by institutional investors. Comparatively, 11.0% of BP shares are owned by institutional investors. 0.3% of Arc Resources shares are owned by company insiders. Comparatively, 1.0% of BP shares are owned 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%. BP pays an annual dividend of $2.06 per share and has a dividend yield of 4.5%. Arc Resources pays out 33.0% of its earnings in the form of a dividend. BP pays out 100.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Arc Resources and BP, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arc Resources	1	10	3	0	2.14
BP	2	8	16	1	2.59

BP has a consensus price target of $48.44, suggesting a potential upside of 4.79%. Given BP’s stronger consensus rating and higher probable upside, analysts plainly believe BP is more favorable than Arc Resources.

Valuation and Earnings

This table compares Arc Resources and BP”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
BP	$192.55 billion	0.63	$55.00 million	$2.05	22.55

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

Profitability

This table compares Arc Resources and BP’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%
BP	2.49%	16.63%	4.39%

Risk & Volatility

Arc Resources has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500. Comparatively, BP has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500.

Summary

BP beats Arc Resources on 10 of the 17 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 BP

BP p.l.c. provides carbon products and services. The company operates through Gas & Low Carbon Energy, Oil Production & Operations, and Customers & Products segments. It engages in the production of natural gas, and integrated gas and power; trading of gas; operation of onshore and offshore wind power, as well as hydrogen and carbon capture and storage facilities; trading and marketing of renewable and non-renewable power; and production of crude oil. In addition, the company involved in convenience and retail fuel, EV charging, Castrol lubricant, aviation, B2B, and midstream businesses; refining and oil trading; and bioenergy business. The company was founded in 1908 and is headquartered in London, the United Kingdom.