Approach Resources Inc

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AREX : NASDAQ : Basic Materials
$2.67 | %
Today's Range: 2.63 - 2.705
Avg. Daily Volume: 604800.0
09/22/17 - 4:00 PM ET

Financial Analysis


APPROACH RESOURCES INC's gross profit margin for the second quarter of its fiscal year 2017 has increased when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its industry. 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 decreased by 5.30% 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 FY17 Q2 FY16
Net Sales ($mil)24.9722.43
EBITDA ($mil)9.827.89
EBIT ($mil)-9.72-12.1
Net Income ($mil)-8.9-16.04


Balance Sheet Q2 FY17 Q2 FY16
Cash & Equiv. ($mil)0.180.89
Total Assets ($mil)1106.271136.46
Total Debt ($mil)370.0499.68
Equity ($mil)550.32581.18


Profitability Q2 FY17 Q2 FY16
Gross Profit Margin74.0168.4
EBITDA Margin39.3435.17
Operating Margin-38.93-53.94
Sales Turnover0.090.09
Return on Assets-15.56-16.21
Return on Equity-31.29-31.7
Debt Q2 FY17 Q2 FY16
Current Ratio0.40.43
Debt/Capital0.40.46
Interest Expense4.926.81
Interest Coverage-1.98-1.78


Share Data Q2 FY17 Q2 FY16
Shares outstanding (mil)86.4841.61
Div / share0.00.0
EPS-0.1-0.39
Book value / share6.3613.97
Institutional Own % n/a n/a
Avg Daily Volume718085.0867335.0

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 0.43 indicates a significant discount versus the S&P 500 average of 3.10 and a significant discount versus the industry average of 475.26. The current price-to-sales ratio is above both the S&P 500 average and the industry average, indicating a premium. The valuation analysis reveals that, APPROACH RESOURCES INC seems to be trading at a premium 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 54.14   AREX 4.51 Peers 11.41

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 53.05   AREX NA Peers 0.57

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 0.43 Peers 475.26   AREX 41.73 Peers 184.28

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 2.32 Peers 2.13   AREX 2.10 Peers 21.12

Average. 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 valuation on par with 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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