ARC Resources (ARX) AI Stock Analysis

• Market Cap: C$14.46B
• Dividend Yield: 2.95%
• Average Volume (3M): 4.31M
• Price to Earnings (P/E): 11.5
• Beta (1Y): 0.81
• Revenue Growth: 15.61%
• EPS Growth: 12.15%
• Country: CA
• Employees: 438
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): 0.45
• Shares Outstanding: 571,164,250
• 10 Day Avg. Volume: 3,686,779
• 30 Day Avg. Volume: 4,311,247
• PEG Ratio: 0.74
• Price to Book (P/B): 1.81
• Price to Sales (P/S): 2.46
• P/FCF Ratio: 11.92
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$27.82
• Price Target Upside: 9.88% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12
• EPS Forecast (FY): 2.14
• Revenue Forecast (FY): C$6.01B

• Rating: 66 Neutral
• Price Target: C$27.00 ▲(6.64% Upside)
• Action: Downgraded Date: 02/08/26
• Date: Action: Downgraded 02/08/26

The score is driven primarily by solid but more risk-tilted financial performance (margin compression, weaker free-cash-flow conversion, and higher leverage) balanced by favorable valuation and a positive earnings-call outlook for higher 2026 free cash flow and continued shareholder returns. Technicals remain the main near-term headwind with the stock trading below key moving averages and weak momentum.

Positive Factors

Production & free cash flow growth

Sustained production scale and demonstrated free cash generation (360k BOE/day; $283m FCF) provide a durable operating base to fund reinvestment and distributions. Higher, predictable operating cash helps absorb commodity swings and supports multi-year capital allocation plans.

Higher liquids (condensate & oil) mix

A growing liquids mix (114k bpd, +30% YoY) increases realized pricing resilience versus gas-only producers. Structurally higher condensate and oil exposure boosts netbacks and revenue per BOE, improving margin durability and downside protection across commodity cycles.

Disciplined capital returns and buybacks

Returning all FCF, lifting the base dividend and sustained buybacks (share count ~21% lower since 2021) shows disciplined capital allocation. This strengthens per‑share cash flow delivery and aligns management incentives with long-term shareholder value.

Negative Factors

Increased leverage in 2025

A meaningful step-up in debt reduces financial flexibility and increases interest and refinancing risk if commodity prices weaken. Higher leverage limits the firm's ability to cut capex or maintain distributions without stressing liquidity during prolonged downturns.

Margin compression and weaker FCF conversion

Compression of gross margins and declining FCF conversion indicate less cushion between revenue and distributable cash. If margins remain pressured, sustaining capital returns and funding growth without raising leverage will be harder over the medium term.

Operational execution & curtailment risk

Asset underperformance and regional curtailments highlight execution and market-access vulnerabilities. Such operational disruptions can materially impede achieving guidance-driven 2026 production and FCF targets, increasing forecast uncertainty over the next several quarters.

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

Strong underlying profitability and operating cash generation, but results are clearly cyclical with notable margin compression in 2025, weaker free-cash-flow conversion, and a meaningful step-up in leverage that reduces flexibility if commodity prices weaken.

Income Statement

Profitability is strong in the most recent annual period (2025), with healthy operating and net profitability, and revenue returning to growth. That said, results are clearly cyclical: revenue and profits peaked in 2022, declined through 2023–2024, and margins have compressed meaningfully from 2022–2023 levels (including a sharp drop in gross profitability in 2025 versus 2024). The 2020 loss also highlights commodity-driven volatility.

Balance Sheet

The balance sheet is generally solid with a sizeable equity base and good profitability on equity in recent years (positive from 2021–2025). However, leverage has increased notably in 2025, with total debt rising sharply versus 2024 and the debt load becoming less conservative than the prior few years. While still not extreme, the higher leverage reduces flexibility if the commodity cycle turns.

Cash Flow

Cash generation remains strong, with operating cash flow consistently exceeding net income by a wide margin across recent years, supporting resilience and reinvestment capacity. The key weakness is conversion to free cash flow: free cash flow is positive but has declined year-over-year in 2025 and remains well below net income in 2024–2025, suggesting heavier capital spending and/or working-capital drag that can pressure shareholder returns in weaker pricing environments.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	6.08B	5.10B	5.66B	8.64B	5.11B
Gross Profit	1.92B	2.83B	3.33B	5.55B	3.25B
EBITDA	3.33B	2.74B	3.39B	4.25B	1.98B
Net Income	1.28B	1.12B	1.60B	2.30B	786.60M
Balance Sheet
Total Assets	15.76B	13.10B	12.38B	11.62B	11.38B
Cash, Cash Equivalents and Short-Term Investments	7.00M	0.00	1.10M	57.10M	0.00
Total Debt	4.83B	2.39B	2.21B	1.79B	2.57B
Total Liabilities	7.49B	5.15B	4.96B	4.97B	5.45B
Stockholders Equity	8.26B	7.95B	7.43B	6.65B	5.93B
Cash Flow
Free Cash Flow	1.26B	546.90M	567.80M	2.41B	953.90M
Operating Cash Flow	3.09B	2.35B	2.39B	3.83B	2.01B
Investing Cash Flow	-3.54B	-1.91B	-1.69B	-1.41B	-808.10M
Financing Cash Flow	449.50M	-443.50M	-759.60M	-2.36B	-1.20B

ARC Resources Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 25.32
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ARX, the sentiment is Positive. The current price of 25.32 is above the 20-day moving average (MA) of 24.63, above the 50-day MA of 24.73, and below the 200-day MA of 26.18, indicating a neutral trend. The MACD of 0.10 indicates Negative momentum. The RSI at 55.80 is Neutral, neither overbought nor oversold. The STOCH value of 70.74 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ARX.

ARC Resources Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PEY	81 Outperform	C$5.39B	14.21	13.48%	5.77%	11.52%	24.76%
SCR	77 Outperform	C$6.47B	5.82	9.60%	2.99%	-11.41%	40.81%
TOU	73 Outperform	C$24.86B	18.24	8.69%	4.79%	8.97%	-21.15%
WCP	71 Outperform	$16.64B	13.74	11.75%	6.33%	36.36%	-19.92%
ARX	66 Neutral	C$14.46B	11.54	15.75%	2.95%	15.61%	12.15%
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%

ARC Resources Corporate Events

ARC Resources to Issue C$950 Million in Senior Unsecured Notes

ARC Resources Ltd. has launched a C$950 million offering of senior unsecured notes, split between C$400 million of 3.349% Series 5 notes due 2029 and C$550 million of 4.104% Series 6 notes due 2033, with Morningstar DBRS assigning a provisional BBB rating with a Stable trend. The company plans to use the proceeds to redeem C$450 million of existing Series 1 notes and fully repay a C$500 million term loan, a move that refines its debt profile and may lower refinancing risk while reinforcing its investment-grade positioning in Canadian credit markets.

The most recent analyst rating on (TSE:ARX) stock is a Hold with a C$25.50 price target. To see the full list of analyst forecasts on ARC Resources stock, see the TSE:ARX Stock Forecast page.

ARC Resources Delivers Record 2025 Output, Cash Flow and Reserves as Montney Strategy Advances

ARC Resources reported record 2025 results, with fourth-quarter production reaching 408,382 boe per day and full-year output averaging 374,336 boe per day, both up 10 per cent on a per-share basis versus 2024. Strong funds from operations of $3.2 billion and free funds flow of $1.3 billion enabled the company to return 75 per cent of free funds flow to shareholders through dividends and buybacks, while reducing net debt to $2.9 billion and supporting continued investment. ARC highlighted premium natural gas realizations relative to AECO for the 13th consecutive year, disciplined curtailments at Sunrise to preserve value, and ongoing portfolio high-grading through a $1.6 billion Kakwa Montney acquisition completed in mid-2025 and an additional Kakwa asset purchase agreement for $160 million signed after year-end. The company also advanced strategic growth and Indigenous partnerships via a development agreement covering up to 36 Montney sections with the Tsaa Dunne Za Energy Limited Partnership and reinforced its future LNG exposure through a long-term offtake deal tied to the Cedar LNG project. Reserves reached record levels, with proved developed producing and total proved plus probable reserves up 15 per cent and nine per cent, respectively, and the company extending its multi-decade track record of strong reserve replacement and positive technical revisions, underscoring long-term resource depth and value for stakeholders.

The most recent analyst rating on (TSE:ARX) stock is a Hold with a C$28.00 price target. To see the full list of analyst forecasts on ARC Resources stock, see the TSE:ARX Stock Forecast page.