Approach Resources Goes Red

Seth Jayson, The Motley Fool
Updated

Approach Resources (NAS: AREX) reported earnings on March 8. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Approach Resources met expectations on revenue and missed on earnings per share.

Compared to the prior-year quarter, revenue expanded significantly and GAAP earnings per share shrank to a loss.

Gross margin increased, operating margin dropped, and net margin contracted.

Revenue details
Approach Resources booked revenue of $31.1 million. The eight analysts polled by S&P Capital IQ expected a top line of $31.1 million on the same basis. GAAP reported sales were 91% higher than the prior-year quarter's $16.3 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.19. The 14 earnings estimates compiled by S&P Capital IQ predicted $0.20 per share on the same basis. GAAP EPS were -$0.30 for Q4 against $0.01 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 83.6%, 480 basis points better than the prior-year quarter. Operating margin was -43.9%, 4,930 basis points worse than the prior-year quarter. Net margin was -29.8%, 3,140 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $32.7 million. On the bottom line, the average EPS estimate is $0.17.

Next year's average estimate for revenue is $154.1 million. The average EPS estimate is $1.06.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 139 members rating the stock outperform and 13 members rating it underperform. Among 43 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 39 give Approach Resources a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Approach Resources is outperform, with an average price target of $35.27.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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