Critical Contrast: Arc Resources (OTCMKTS:AETUF) and SandRidge Energy (NYSE:SD)

SandRidge Energy (NYSE:SD) and Arc Resources (OTCMKTS:AETUF) are both energy companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, risk and profitability.

Valuation & Earnings

This table compares SandRidge Energy and Arc Resources”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SandRidge Energy	$156.36 million	3.21	$70.20 million	$2.05	6.63
Arc Resources	$4.35 billion	3.04	$912.59 million	$1.79	13.02

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

Analyst Ratings

This is a summary of current ratings and price targets for SandRidge Energy and Arc Resources, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SandRidge Energy	0	2	0	0	2.00
Arc Resources	2	9	3	0	2.07

Dividends

SandRidge Energy pays an annual dividend of $0.52 per share and has a dividend yield of 3.8%. Arc Resources pays an annual dividend of $0.59 per share and has a dividend yield of 2.5%. SandRidge Energy pays out 25.4% of its earnings in the form of a dividend. Arc Resources pays out 33.0% 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. SandRidge Energy has increased its dividend for 2 consecutive years. SandRidge Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares SandRidge Energy and Arc Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SandRidge Energy	46.06%	13.84%	11.05%
Arc Resources	19.75%	16.91%	9.16%

Risk and Volatility

SandRidge Energy has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500. Comparatively, Arc Resources has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.

Institutional and Insider Ownership

61.8% of SandRidge Energy shares are owned by institutional investors. Comparatively, 2.5% of Arc Resources shares are owned by institutional investors. 1.6% of SandRidge Energy shares are owned by insiders. Comparatively, 0.3% of Arc Resources shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

SandRidge Energy beats Arc Resources on 10 of the 16 factors compared between the two stocks.

About SandRidge Energy

SandRidge Energy, Inc. engages in the acquisition, development, and production of oil, natural gas, and natural gas liquids in the United States Mid-Continent. The company was incorporated in 2006 and is headquartered in Oklahoma City, Oklahoma.

About Arc Resources

ARC Resources Ltd. engages in the acquiring and developing crude oil, natural gas, condensate, and natural gas liquids in Canada. It primarily holds interests in the Montney basin located in Alberta and northeast British Columbia. ARC Resources Ltd. was founded in 1996 and is based in Calgary, Canada.