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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Approach Resources Inc
AREX : NASDAQ : Basic Materials
$17.88 0.09 | 0.51%
Today's Range: 17.51 - 17.94
Avg. Daily Volume: 850,500
08/29/14 - 4:00 PM ET

Financial Analysis


APPROACH RESOURCES INC's gross profit margin for the second quarter of its fiscal year 2014 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line. APPROACH RESOURCES INC has very weak liquidity. Currently, the Quick Ratio is 0.25 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year.

During the same period, stockholders' equity ("net worth") has increased by 11.87% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q2 FY14 Q2 FY13
Net Sales ($mil)73.4142.27
EBITDA ($mil)51.1729.43
EBIT ($mil)22.610.94
Net Income ($mil)3.797.79


Balance Sheet Q2 FY14 Q2 FY13
Cash & Equiv. ($mil)0.4455.28
Total Assets ($mil)1227.841009.93
Total Debt ($mil)296.0250.0
Equity ($mil)720.75644.27


Profitability Q2 FY14 Q2 FY13
Gross Profit Margin82.4783.3
EBITDA Margin69.769.6
Operating Margin30.7825.89
Sales Turnover0.190.15
Return on Assets5.820.42
Return on Equity9.920.65
Debt Q2 FY14 Q2 FY13
Current Ratio0.311.3
Debt/Capital0.290.28
Interest Expense5.362.45
Interest Coverage4.224.46


Share Data Q2 FY14 Q2 FY13
Shares outstanding (mil)39.3738.99
Div / share0.00.0
EPS0.10.2
Book value / share18.3116.52
Institutional Own % n/a n/a
Avg Daily Volume849611.01068268.0

Valuation


HOLD. The current P/E ratio indicates a significant discount compared to an average of 25.10 for the Oil, Gas & Consumable Fuels industry and a discount compared to the S&P 500 average of 19.76. For additional comparison, its price-to-book ratio of 0.99 indicates a significant discount versus the S&P 500 average of 2.73 and a significant discount versus the industry average of 14.73. The price-to-sales ratio is well above both the S&P 500 average and the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, APPROACH RESOURCES INC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
AREX 9.89 Peers 25.10   AREX 4.29 Peers 20.30

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

AREX is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

AREX is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
AREX 16.92 Peers 18.54   AREX NM Peers 1.96

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

AREX is trading at a premium to its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

AREX's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
AREX 0.99 Peers 14.73   AREX 1740.00 Peers 13.00

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

AREX is trading at a significant discount to its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

AREX is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AREX 3.01 Peers 2.48   AREX 62.09 Peers 9.12

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

AREX is trading at a premium to its industry on this measurement.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

AREX has a sales growth rate that significantly exceeds its peers.

 

 

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