Approach Resources Inc

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AREX : NASDAQ : Basic Materials
$2.99 -0.05 | -1.6%
Today's Range: 2.87 - 3.049
Avg. Daily Volume: 958000.0
07/21/17 - 3:59 PM ET

Financial Analysis


APPROACH RESOURCES INC's gross profit margin for the first quarter of its fiscal year 2017 has significantly increased 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 0.34 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, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 6.26% 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 Q1 FY17 Q1 FY16
Net Sales ($mil)26.3617.62
EBITDA ($mil)12.862.98
EBIT ($mil)-5.11-17.25
Net Income ($mil)-140.77-13.66


Balance Sheet Q1 FY17 Q1 FY16
Cash & Equiv. ($mil)0.080.84
Total Assets ($mil)1098.031155.08
Total Debt ($mil)357.79495.96
Equity ($mil)558.51595.85


Profitability Q1 FY17 Q1 FY16
Gross Profit Margin75.2354.47
EBITDA Margin48.7816.88
Operating Margin-19.37-97.95
Sales Turnover0.090.1
Return on Assets-16.33-15.58
Return on Equity-32.11-30.21
Debt Q1 FY17 Q1 FY16
Current Ratio0.410.58
Debt/Capital0.390.45
Interest Expense5.466.3
Interest Coverage-0.93-2.74


Share Data Q1 FY17 Q1 FY16
Shares outstanding (mil)86.2640.79
Div / share0.00.0
EPS-2.0-0.33
Book value / share6.4714.61
Institutional Own % n/a n/a
Avg Daily Volume977331.0978595.0

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 0.46 indicates a significant discount versus the S&P 500 average of 3.04 and a significant discount versus the industry average of 87.40. The current price-to-sales ratio is well above the S&P 500 average and above 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 54.47   AREX 5.31 Peers 15.44

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 27.57   AREX NA Peers 1.09

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 0.46 Peers 87.40   AREX 33.87 Peers 95.61

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 2.60 Peers 2.23   AREX -14.37 Peers 7.47

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.

 

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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