ARC Resources (ARX) AI Stock Analysis

• Market Cap: $15.22B
• Dividend Yield: 2.83%
• Average Volume (3M): 1.63M
• Price to Earnings (P/E): 10.3
• Beta (1Y): 1.14
• Revenue Growth: 8.28%
• EPS Growth: 31.00%
• Country: CA
• Employees: 438
• Sector: Energy
• Sector Strength: 58
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.68
• Shares Outstanding: 582,420,700
• 10 Day Avg. Volume: 1,642,513
• 30 Day Avg. Volume: 1,626,543
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.23
• Enterprise Value/Revenue: 3.07
• Enterprise Value/Gross Profit: 6.53
• Enterprise Value/Ebitda: 5.44
• 1Y Price Target: $34.23
• Price Target Upside: 30.94% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 75 Outperform
• Price Target: ―

ARC Resources receives a solid score of 74.9, reflecting its strong financial performance and positive corporate developments. While technical indicators show some caution, the company's strategic initiatives and stable valuation metrics provide a strong foundation for future growth. Key strengths include robust profitability, effective cost management, and strategic market expansion through the LNG deal. Monitoring revenue growth and market conditions will be essential for sustaining its competitive position.

Positive Factors

Financial Performance

Management confident in full year.

Market Position

ARC is the largest condensate producer in Canada, with shares believed to be undervalued due to a strong balance sheet and high returns.

Strong Demand

Strong GenAI demand is driving the growth.

Negative Factors

Initial Well Performance

Initial well rates for Attachie Phase 1 peak as expected but decline materially afterwards, requiring further data to assess performance.

Market Volatility

Recent oil market volatility could push the timeline for Attachie Phase II back, particularly in the event of a sharper deterioration in WTI prices below the US$50/bbl level.

Production Challenges

ARX posted in-line production and beat on CFPS in a quarter with underwhelming Attachie volumes and gas curtailments.

ARC Resources Business Overview & Revenue Model

Company Description

ARC Resources Ltd. explores, develops, and produces crude oil, natural gas, and natural gas liquids in Canada. The company holds interests in the Montney properties located in northeast British Columbia and northern Alberta; and Pembina Cardium properties in central Alberta. As of December 31, 2020, it had proved plus probable reserves of 929 millions of barrels of oil equivalent. ARC Resources Ltd. was founded in 1996 and is headquartered in Calgary, Canada.

How the Company Makes Money

ARC Resources generates revenue through the sale of crude oil, natural gas, and natural gas liquids (NGLs) produced from its extensive portfolio of assets. The company's revenue model is primarily based on the production and sale of these hydrocarbons to various markets, including domestic and international buyers. ARC Resources leverages its advanced technology and operational expertise to maximize recovery rates and optimize production efficiency. Key revenue streams include long-term sales contracts, spot market sales, and potential hedging strategies to mitigate price volatility. The company's earnings are significantly influenced by global commodity prices, production volumes, and operational costs. Additionally, strategic partnerships and joint ventures can enhance its access to markets and infrastructure, contributing to its financial performance.

ARC Resources Financial Statement Overview

Summary

ARC Resources demonstrates strong financial health with robust profitability, effective cost management, and a solid balance sheet. Revenue growth has slowed, which requires monitoring, but the company's prudent use of leverage and strong cash flow generation support its overall stability. Continued focus on managing capital expenditure and sustaining growth will be key to maintaining its financial strength.

Income Statement

ARC Resources shows strong profitability with a stable gross profit margin of 48.9% and a notable net profit margin of 22.9% for TTM. Revenue growth is moderate at 4.1% from the previous period. The EBIT margin is solid at 30.4%, and EBITDA margin is robust at 55.4%, indicating effective cost management. However, the revenue growth has slowed compared to previous years, which could be a concern if the trend continues.

Balance Sheet

The balance sheet is healthy with a low debt-to-equity ratio of 0.25, reflecting conservative leverage. Return on equity is substantial at 16.6%, indicating efficient use of equity capital. The equity ratio stands at 62.1%, showcasing financial stability and a strong asset base. These metrics suggest a well-capitalized company with prudent financial management.

Cash Flow

Cash flow analysis reveals a positive trajectory with operating cash flow to net income ratio at 2.03, indicating strong cash generation relative to earnings. Free cash flow growth is impressive at 73.9% TTM, and free cash flow to net income ratio is 0.71, reflecting solid cash flow health. Nevertheless, the high capital expenditure reflects ongoing investment, which could impact short-term liquidity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.11B	5.62B	5.66B	9.85B	5.51B	1.17B
Gross Profit	2.88B	2.73B	3.33B	4.80B	2.62B	-362.20M
EBITDA	3.45B	2.95B	3.57B	4.39B	2.18B	-185.70M
Net Income	1.50B	1.12B	1.60B	2.30B	786.60M	-547.20M
Balance Sheet
Total Assets	14.18B	13.10B	12.38B	11.62B	11.38B	4.95B
Cash, Cash Equivalents and Short-Term Investments	949.80M	0.00	1.10M	57.10M	-869.30M	400.00K
Total Debt	2.94B	2.39B	2.21B	1.79B	2.57B	751.10M
Total Liabilities	5.88B	5.15B	4.96B	4.97B	5.45B	2.16B
Stockholders Equity	8.30B	7.95B	7.43B	6.65B	5.93B	2.79B
Cash Flow
Free Cash Flow	1.15B	546.90M	567.80M	2.41B	953.90M	320.90M
Operating Cash Flow	2.88B	2.35B	2.39B	3.83B	2.01B	655.70M
Investing Cash Flow	-1.66B	-1.91B	-1.69B	-1.41B	-808.10M	-364.30M
Financing Cash Flow	-271.30M	-443.50M	-759.60M	-2.36B	-1.20B	-299.50M

ARC Resources Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 26.14
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ARX, the sentiment is Negative. The current price of 26.14 is below the 20-day moving average (MA) of 27.01, below the 50-day MA of 27.71, and below the 200-day MA of 26.71, indicating a bearish trend. The MACD of -0.34 indicates Positive momentum. The RSI at 36.81 is Neutral, neither overbought nor oversold. The STOCH value of 17.07 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ARX.

ARC Resources Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARX	75 Outperform	$15.22B	10.26	18.43%	2.83%	8.28%	31.00%
Sector *	65 Neutral	$15.47B	7.30	3.02%	5.25%	4.27%	-62.52%
MEGEF	―	$5.17B	13.38	11.70%	1.42%	―	―
WCPRF	―	$9.14B	6.98	11.56%	6.85%	―	―
PREKF	―	$4.07B	25.87	8.08%	4.19%	―	―
PEY	82 Outperform	C$3.77B	11.26	12.21%	7.01%	7.02%	7.16%
TOU	73 Outperform	C$22.43B	14.31	9.76%	5.21%	3.86%	-5.32%

ARC Resources Corporate Events

ARC Resources Reports Robust Q1 2025 Results and Strategic LNG Agreement

ARC Resources Ltd. reported a strong first quarter in 2025, with production and financial metrics aligning with their guidance. The company achieved a 6% increase in production compared to the previous year and maintained a strategic focus on market diversification, particularly in natural gas pricing. ARC also announced a significant LNG supply agreement with ExxonMobil, expected to commence in 2028, which positions the company for future growth in international markets. Additionally, ARC is committed to returning free funds flow to shareholders and has reduced its long-term debt, indicating a stable financial outlook.

Spark’s Take on TSE:ARX Stock

According to Spark, TipRanks’ AI Analyst, TSE:ARX is a Neutral.

ARC Resources displays solid financial health with strong profitability and cash generation. Despite some challenges in maintaining growth, the company’s low leverage and healthy equity ratio are positives. Technical indicators show potential downward pressure, though the stock is fairly valued with a reasonable P/E ratio and an attractive dividend yield. Recent corporate events, including a strategic LNG deal and record production, significantly boost its outlook.

To see Spark’s full report on TSE:ARX stock, click here.

ARC Resources Confirms Quarterly Dividend of $0.19 per Share

ARC Resources Ltd. has announced a quarterly dividend of $0.19 per share, payable on April 15, 2025, to shareholders of record as of March 31, 2025. This announcement reflects ARC’s stable financial performance and commitment to returning value to shareholders, reinforcing its position as a leading dividend-paying energy company in Canada.

ARC Resources Secures Long-Term LNG Deal with ExxonMobil

ARC Resources Ltd. has entered into a long-term sale and purchase agreement with ExxonMobil LNG Asia Pacific for the supply of liquefied natural gas from the Cedar LNG Project. This agreement marks a significant step in ARC’s strategy to link a substantial portion of its future natural gas production to international pricing, enhancing its market diversification and margin expansion. The partnership with ExxonMobil provides the latter with its first long-term offtake position on Canada’s Pacific Coast, strengthening both companies’ positions in the global LNG market.

ARC Resources Achieves Record Year-End Production and Financial Gains in 2024

ARC Resources Ltd. reported record production in the fourth quarter of 2024, with significant increases in both condensate and light oil production, driven by successful operations at Attachie Phase I and Kakwa. The company strategically managed natural gas production curtailments to optimize profitability, and as a result, ARC realized strong financial performance, including high funds from operations and reduced net debt by the year’s end.