Archrock (NYSE:AROC) versus TechnipFMC (NYSE:FTI) Critical Review

Archrock (NYSE:AROC) and TechnipFMC (NYSE:FTI) are both energy companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Valuation and Earnings

This table compares Archrock and TechnipFMC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Archrock	$1.16 billion	4.42	$172.23 million	$1.50	19.46
TechnipFMC	$9.08 billion	2.49	$842.90 million	$2.24	24.97

TechnipFMC has higher revenue and earnings than Archrock. Archrock is trading at a lower price-to-earnings ratio than TechnipFMC, indicating that it is currently the more affordable of the two stocks.

Dividends

Archrock pays an annual dividend of $0.84 per share and has a dividend yield of 2.9%. TechnipFMC pays an annual dividend of $0.20 per share and has a dividend yield of 0.4%. Archrock pays out 56.0% of its earnings in the form of a dividend. TechnipFMC pays out 8.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Archrock has raised its dividend for 3 consecutive years and TechnipFMC has raised its dividend for 1 consecutive years. Archrock is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Archrock and TechnipFMC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Archrock	18.43%	20.17%	6.68%
TechnipFMC	9.67%	30.23%	9.72%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Archrock and TechnipFMC, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Archrock	0	2	6	0	2.75
TechnipFMC	0	2	12	1	2.93

Archrock currently has a consensus price target of $32.40, suggesting a potential upside of 10.98%. TechnipFMC has a consensus price target of $48.58, suggesting a potential downside of 13.12%. Given Archrock’s higher probable upside, analysts clearly believe Archrock is more favorable than TechnipFMC.

Institutional and Insider Ownership

95.5% of Archrock shares are held by institutional investors. Comparatively, 96.6% of TechnipFMC shares are held by institutional investors. 2.6% of Archrock shares are held by company insiders. Comparatively, 1.8% of TechnipFMC shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Archrock has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, TechnipFMC has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500.

Summary

TechnipFMC beats Archrock on 11 of the 18 factors compared between the two stocks.

About Archrock

Archrock, Inc., together with its subsidiaries, operates as an energy infrastructure company in the United States. The company operates in two segments, Contract Operations and Aftermarket Services. It engages in the designing, sourcing, owning, installing, operating, servicing, repairing, and maintaining of its owned fleet of natural gas compression equipment to provide natural gas compression services. The company also sells over-the-counter parts and components; and provides operations, major and routine maintenance, overhaul, and reconfiguration services to customers who own compression equipment. It serves integrated and independent oil and natural gas processors, gatherers, and transporters. The company was formerly known as Exterran Holdings, Inc. and changed its name to Archrock, Inc. in November 2015. Archrock, Inc. was founded in 1990 and is headquartered in Houston, Texas.

About TechnipFMC

TechnipFMC plc engages in the energy projects, technologies, and systems and services businesses in Europe, Central Asia, North America, Latin America, the Asia Pacific, Africa, the Middle East, and internationally. It operates through two segments: Subsea and Surface Technologies. The Subsea segment engages in the design, engineering, procurement, manufacturing, fabrication, installation, and life of field services for subsea systems, subsea field infrastructure, and subsea pipe systems used in oil and gas production and transportation. It provides subsea production and processing system; flexible pipe; subsea umbilicals, risers, and flowlines; vessels; robotics; well and asset services; and Subsea Studio for optimizing the development, execution, and operation of current and future subsea fields. The Surface Technologies segment designs, manufactures, and services products and systems used in land and shallow water exploration and production of crude oil and natural gas. This segment offers drilling; surface wellheads and production trees systems; iComplete, a pressure control system; fracturing tree and manifold systems; flexible pipes; safety and integrity systems, multiphase meter modules, in-line separation and processing systems, and standard pumps; well control and integrity systems; separation and processing systems; skid systems; and flow measurement and automation solutions. It also offers planning, testing and installation, commissioning, operations, replacement and upgrade, maintenance, storage, preservation, intervention, integrity, decommissioning, and abandonment; and supplies flowline products and services. TechnipFMC plc was founded in 1884 and is headquartered in Houston, Texas.