Arc Resources (OTCMKTS:AETUF) vs. Paramount Resources (OTCMKTS:PRMRF) Financial Analysis

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Paramount Resources	94.21%	9.08%	7.06%
Arc Resources	29.09%	16.98%	10.32%

Dividends

Paramount Resources pays an annual dividend of $0.44 per share and has a dividend yield of 2.8%. Arc Resources pays an annual dividend of $0.56 per share and has a dividend yield of 2.8%. Paramount Resources pays out 5.9% of its earnings in the form of a dividend. Arc Resources pays out 34.6% 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. Paramount Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Paramount Resources has a beta of 1.6, suggesting that its stock price is 60% more volatile than the S&P 500. Comparatively, Arc Resources has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Valuation and Earnings

This table compares Paramount Resources and Arc Resources”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Paramount Resources	$1.28 billion	1.75	$245.14 million	$7.41	2.11
Arc Resources	$2.98 billion	3.96	$820.37 million	$1.62	12.45

Arc Resources has higher revenue and earnings than Paramount Resources. Paramount Resources 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 recent ratings for Paramount Resources and Arc Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Paramount Resources	0	2	0	1	2.67
Arc Resources	0	0	3	1	3.25

Institutional & Insider Ownership

4.1% of Paramount Resources shares are held by institutional investors. Comparatively, 2.5% of Arc Resources shares are held by institutional investors. 36.3% of Paramount Resources shares are held by company insiders. Comparatively, 0.3% of Arc Resources shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Arc Resources beats Paramount Resources on 8 of the 15 factors compared between the two stocks.

About Paramount Resources

Paramount Resources Ltd. explores for and develops conventional and unconventional petroleum and natural gas reserves and resources in Canada. The company holds interests in the Karr and Wapiti Montney properties covering an area of 109,000 net acres located south of the city of Grande Prairie, Alberta; Kaybob North Duvernay development and natural gas producing properties covering an area of 124,000 net acres located in west-central Alberta; and Willesden Green Duvernay development in central Alberta and shale gas producing properties in the Horn River Basin in northeast British Columbia covering an area of 249,000 net acres. The company was founded in 1976 and is based in Calgary, Canada.

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.