Approach Resources Inc

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AREX : NASDAQ : Basic Materials
$2.90 | %
Today's Range: 2.80 - 3.03
Avg. Daily Volume: 962,700
08/26/16 - 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.

During the same period, stockholders' equity ("net worth") has decreased by 23.42% from the same quarter last year.

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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)40.7940.55
Div / share0.00.0
EPS-0.39-0.29
Book value / share14.2518.72
Institutional Own % n/a n/a
Avg Daily Volume894426.0813445.0

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 0.21 indicates a significant discount versus the S&P 500 average of 2.83 and a significant discount versus the industry average of 14.60. 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 78.53   AREX NA Peers 11.01

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.

 

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

Ratio not available.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
AREX NM Peers 46.04   AREX NA Peers 2.52

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 14.60   AREX -688.31 Peers -230.31

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 1.21 Peers 2.62   AREX -49.01 Peers -26.36

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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