Critical Contrast: Archrock (NYSE:AROC) and Summit Midstream (NYSE:SMC)

Archrock (NYSE:AROC) and Summit Midstream (NYSE:SMC) are both oils/energy companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Archrock	13.34%	16.24%	5.40%
Summit Midstream	-23.01%	0.71%	0.22%

Volatility and Risk

Archrock has a beta of 1.59, meaning that its share price is 59% more volatile than the S&P 500. Comparatively, Summit Midstream has a beta of 2.39, meaning that its share price is 139% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Archrock and Summit Midstream, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Archrock	0	0	6	0	3.00
Summit Midstream	0	0	0	0	0.00

Archrock currently has a consensus price target of $25.17, suggesting a potential upside of 2.51%. Given Archrock’s stronger consensus rating and higher probable upside, equities analysts clearly believe Archrock is more favorable than Summit Midstream.

Institutional & Insider Ownership

95.4% of Archrock shares are held by institutional investors. Comparatively, 43.0% of Summit Midstream shares are held by institutional investors. 2.9% of Archrock shares are held by company insiders. Comparatively, 5.3% of Summit Midstream shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Archrock and Summit Midstream”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Archrock	$1.09 billion	3.94	$105.00 million	$0.91	26.98
Summit Midstream	$449.92 million	0.83	-$38.95 million	($12.81)	-2.73

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

Summary

Archrock beats Summit Midstream on 12 of the 14 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 Summit Midstream

Summit Midstream Corporation focuses on owning, developing, and operating midstream energy infrastructure assets primarily shale formations in the continental United States. It operates natural gas, crude oil, and produced water gathering systems in four unconventional resource basins, including the Williston Basin in North Dakota, which includes the Bakken and Three Forks shale formations; the Denver-Julesburg Basin that consists of the Niobrara and Codell shale formations in Colorado and Wyoming; the Fort Worth Basin in Texas, which comprises the Barnett Shale formation; and the Piceance Basin in Colorado, which includes the Mesaverde formation, as well as the emerging Mancos and Niobrara Shale formations. It serves natural gas and crude oil producers. Summit Midstream Corporation was founded in 2012 and is based in Houston, Texas.