Approach Resources Inc

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AREX : NASDAQ : Basic Materials
$3.13 | %
Today's Range: 0.00 - 0.00
Avg. Daily Volume: 1,296,400
09/28/16 - 4:00 PM ET

Financial Analysis


APPROACH RESOURCES INC's gross profit margin for the second quarter of its fiscal year 2016 has decreased when compared to the same period a year ago. Sales and net income fell significantly; although net income growth outperformed the average competitor in its industry, revenue growth did not. APPROACH RESOURCES INC has very weak liquidity. Currently, the Quick Ratio is 0.31 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from the same period last year.

During the same period, stockholders' equity ("net worth") has decreased by 23.42% 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 FY16 Q2 FY15
Net Sales ($mil)22.4338.61
EBITDA ($mil)7.8920.04
EBIT ($mil)-12.1-8.37
Net Income ($mil)-16.04-11.85


Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)0.890.75
Total Assets ($mil)1136.461443.13
Total Debt ($mil)499.68499.1
Equity ($mil)581.18758.96


Profitability Q2 FY16 Q2 FY15
Gross Profit Margin68.474.38
EBITDA Margin35.1751.9
Operating Margin-53.94-21.67
Sales Turnover0.090.14
Return on Assets-16.212.07
Return on Equity-31.73.93
Debt Q2 FY16 Q2 FY15
Current Ratio0.430.53
Debt/Capital0.460.4
Interest Expense6.816.24
Interest Coverage-1.78-1.34


Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)41.6140.55
Div / share0.00.0
EPS-0.39-0.29
Book value / share13.9718.72
Institutional Own % n/a n/a
Avg Daily Volume1329650.0781954.0

Valuation


SELL. The current P/E ratio is negative, which has no meaningful value in the assessment of premium or discount valuation, it simply displays that the company has negative earnings. For additional comparison, its price-to-book ratio of 0.21 indicates a significant discount versus the S&P 500 average of 2.82 and a significant discount versus the industry average of 15.56. The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. After reviewing 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 NM Peers 80.60   AREX 1.96 Peers 10.97

Neutral. The absence of a valid P/E ratio happens when a stock can not be valued on the basis of a negative stream of earnings.

AREX's P/E is negative making this valuation measure meaningless.

 

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 NM Peers 49.84   AREX NA Peers 3.87

Neutral. The absence of a valid price-to-projected earnings ratio happens when a stock can not be valued on the basis of a negative expected future earnings.

AREX's ratio is negative making this valuation measure meaningless.

 

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.

Ratio not available.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
AREX 0.21 Peers 15.56   AREX -688.31 Peers -227.20

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.

 

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

However, AREX is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AREX 1.23 Peers 2.58   AREX -49.01 Peers -26.14

Discount. 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 significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

AREX significantly trails its peers on the basis of sales growth

 

 

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