Critical Survey: Arc Resources (OTCMKTS:AETUF) and Summit Midstream Partners (NYSE:SMC)

Arc Resources (OTCMKTS:AETUF) and Summit Midstream Partners (NYSE:SMC) are both energy companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, risk, profitability and dividends.

Profitability

This table compares Arc Resources and Summit Midstream Partners’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arc Resources	19.75%	16.67%	9.09%
Summit Midstream Partners	1.61%	1.17%	0.41%

Insider and Institutional Ownership

2.5% of Arc Resources shares are held by institutional investors. Comparatively, 43.0% of Summit Midstream Partners shares are held by institutional investors. 0.3% of Arc Resources shares are held by insiders. Comparatively, 43.0% of Summit Midstream Partners shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Arc Resources and Summit Midstream Partners”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arc Resources	$4.35 billion	3.20	$912.59 million	$1.79	13.71
Summit Midstream Partners	$619.45 million	1.01	$8.93 million	($0.40)	-77.13

Arc Resources has higher revenue and earnings than Summit Midstream Partners. Summit Midstream Partners 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 Recommendations

This is a summary of current recommendations and price targets for Arc Resources and Summit Midstream Partners, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arc Resources	1	10	2	0	2.08
Summit Midstream Partners	0	2	2	0	2.50

Summit Midstream Partners has a consensus target price of $43.00, suggesting a potential upside of 39.38%. Given Summit Midstream Partners’ stronger consensus rating and higher possible upside, analysts clearly believe Summit Midstream Partners is more favorable than Arc Resources.

Volatility & Risk

Arc Resources has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500. Comparatively, Summit Midstream Partners has a beta of 0.88, suggesting that its stock price is 12% less volatile than the S&P 500.

Summary

Arc Resources beats Summit Midstream Partners on 8 of the 13 factors compared between the two stocks.

About Arc Resources

ARC Resources Ltd. is a Canadian energy company that explores for, develops and produces natural gas, condensate, crude oil and other natural gas liquids. Its operations are focused on the Montney formation in Alberta and British Columbia, where the company develops unconventional energy resources. Founded in 1996 and headquartered in Calgary, ARC has built its business around the Montney, a large resource basin spanning parts of western Canada. Its production is marketed to customers in Canada and international markets, including through connections to liquefied natural gas export infrastructure.

About Summit Midstream Partners

Summit Midstream Corporation, formerly Summit Midstream Partners, is a midstream energy company that provides infrastructure and services to natural gas and crude oil producers. Its operations include gathering, compressing, treating and processing natural gas, as well as gathering and handling crude oil and produced water. The company’s assets serve production areas including the Williston Basin in North Dakota, the Piceance and Denver-Julesburg basins in Colorado, the Permian Basin in Texas and the Barnett Shale in Texas.