Approach Resources Inc

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AREX : NASDAQ : Basic Materials
$3.17 | %
Today's Range: 3.13 - 3.3
Avg. Daily Volume: 1164300.0
01/20/17 - 4:00 PM ET

Financial Analysis


APPROACH RESOURCES INC's gross profit margin for the third quarter of its fiscal year 2016 has significantly increased when compared to the same period a year ago. Even though sales decreased, the net income has increased. APPROACH RESOURCES INC has very weak liquidity. Currently, the Quick Ratio is 0.41 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 6.27% 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 Q3 FY16 Q3 FY15
Net Sales ($mil)23.7533.94
EBITDA ($mil)10.97-200.66
EBIT ($mil)-8.45-237.39
Net Income ($mil)-9.07-148.79


Balance Sheet Q3 FY16 Q3 FY15
Cash & Equiv. ($mil)2.710.32
Total Assets ($mil)1122.581208.83
Total Debt ($mil)500.01515.59
Equity ($mil)573.46611.88


Profitability Q3 FY16 Q3 FY15
Gross Profit Margin75.13-563.14
EBITDA Margin46.19-591.21
Operating Margin-35.59-699.4
Sales Turnover0.080.13
Return on Assets-3.96-11.69
Return on Equity-7.76-23.1
Debt Q3 FY16 Q3 FY15
Current Ratio0.490.72
Debt/Capital0.470.46
Interest Expense7.076.47
Interest Coverage-1.2-36.72


Share Data Q3 FY16 Q3 FY15
Shares outstanding (mil)41.6140.44
Div / share0.00.0
EPS-0.22-3.67
Book value / share13.7815.13
Institutional Own % n/a n/a
Avg Daily Volume1162617.01399844.0

Valuation


SELL. This stock’s P/E ratio is negative, making its value useless in the assessment of premium or discount valuation, only displaying that the company has negative earnings per share. For additional comparison, its price-to-book ratio of 0.23 indicates a significant discount versus the S&P 500 average of 2.84 and a significant discount versus the industry average of 23.93. 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 42.39   AREX 3.31 Peers 13.47

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 63.03   AREX NA Peers 2.40

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 0.23 Peers 23.93   AREX 68.88 Peers -244.01

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 1.47 Peers 2.74   AREX -44.52 Peers -20.21

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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