One-glance verdict
Undervalued
$107.47 our estimate vs market $35.90
Wall Street consensus: $49.19 (-54.2% lower than our fair-value estimate)
67% below our estimate, below the bear case
Fundamentals snapshot
Antero Resources Corporation
AR · NYQ · Energy · Oil & Gas E&P
Current price
$35.90
52-week range
$29.10 - $45.75
Market cap
$11.04B
Balance sheet
Watch
9.91x Adequate
Net debt $4.62B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 16.2% last year.
- Reward Returns 14.2% on equity, ahead of 33% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Operating margin compressed from 52.2% to 26.0% over 3 years.
What this company does
Antero Resources Corporation
Antero Resources Corporation is a company that finds and produces natural gas, oil, and other liquid fuels primarily from land it owns in the Appalachian Basin. Most of the money it makes comes from selling these natural resources. This matters because their profits depend directly on how much of these fuels they can extract and the fluctuating prices they can get for them.
How the company got here
Antero Resources was founded in 2002 by Paul Rady and Glen Warren, who previously sold their company, Pennaco Energy, to Marathon Oil. Initially, Antero focused on unconventional natural gas reserves across different U.S. regions. A significant turning point came in 2012 when the company decided to concentrate its efforts on the Appalachian Basin, specifically the Marcellus and Utica shale plays. This strategic shift was solidified with its initial public offering (IPO) in October 2013, which provided capital to fund its development. In 2014, Antero launched Antero Midstream to handle the infrastructure needed for its operations, such as gathering and processing natural gas. Over the years, Antero has grown to become one of the largest natural gas and natural gas liquids (NGLs) producers in the United States.
What it actually does
Antero Resources is an independent oil and natural gas company. Its primary business is exploring for, developing, and producing natural gas, natural gas liquids (NGLs), and oil. Think of them as a modern-day prospector, but instead of searching for gold, they're extracting valuable energy resources from deep within the earth. These resources are then sold to other companies that use them for a wide range of purposes, from heating homes and powering industries to creating plastics and other everyday products.
Exploration and Production
This is the core of Antero's business, where they find and extract natural gas, NGLs, and oil. They operate primarily in the Appalachian Basin, specifically targeting the Marcellus and Utica shale formations. This involves using advanced techniques like horizontal drilling and hydraulic fracturing (fracking) to access the energy trapped in these rock layers. The company manages a large amount of land, holding rights to explore and produce these resources. This segment is the largest contributor to Antero's overall revenue.
Marketing
Once Antero extracts the natural gas and NGLs, they need to get them to market. The Marketing segment is responsible for selling these products. This involves managing transportation, like pipelines, to move the resources to buyers. Antero focuses on selling its products into premium markets, which means getting the best possible price. This can include selling to areas with high demand, like the Gulf Coast, or to facilities that export natural gas, such as Liquefied Natural Gas (LNG) terminals. This segment is crucial for ensuring Antero gets paid for its production.
Equity Method Investment in Antero Midstream
Antero Resources has a significant investment in Antero Midstream, a separate company that provides essential infrastructure services. Antero Midstream owns and operates pipelines, processing plants, and other facilities that gather, compress, and transport natural gas and NGLs from Antero Resources' production sites. By having a stake in Antero Midstream, Antero Resources benefits from reliable access to these critical services, which helps lower their operating costs and ensures their products can reach the market efficiently. This segment represents a strategic partnership that supports Antero's main business.
What management is betting on now
Antero's current strategy focuses on consolidating its position in the highest-quality, lowest-cost areas of the Appalachian Basin, particularly in West Virginia. They've been actively acquiring assets that enhance profitability and extend their drilling inventory, which is the company's future supply of resources. A key part of their strategy is to maximize the value of their diverse product mix, which includes not just natural gas but also valuable NGLs like ethane and propane. They are also prioritizing capital efficiency, meaning they want to spend money wisely to generate strong returns and reduce debt, while also returning capital to shareholders.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$1.56B
Net income
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Diluted EPS
0.90
Operating cash flow
$438.85M
Free cash flow
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Sources
Revenue
$1.95B
Net income
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Diluted EPS
1.72
Operating cash flow
$859.06M
Free cash flow
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Sources
Revenue
$1.41B
Net income
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Diluted EPS
0.63
Operating cash flow
$370.74M
Free cash flow
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Sources
Revenue
$1.21B
Net income
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Diluted EPS
0.24
Operating cash flow
$310.09M
Free cash flow
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Sources
Revenue
$1.30B
Net income
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Diluted EPS
0.50
Operating cash flow
$492.36M
Free cash flow
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Sources
Revenue
$1.35B
Net income
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Diluted EPS
0.66
Operating cash flow
$457.74M
Free cash flow
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Sources
Revenue
$1.17B
Net income
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Diluted EPS
0.34
Operating cash flow
$278.00M
Free cash flow
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Sources
Revenue
$1.06B
Net income
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Diluted EPS
-0.07
Operating cash flow
$166.18M
Free cash flow
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Is it cheap or expensive?
Fair value $107.47 vs current price $35.90
Wall Street consensus is the average analyst price target: $49.19 (-54.2% lower than our fair-value estimate).
Our most-likely fair value is $107.47 a share — about 199.4% above today's price of $35.90, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net debt $4.6B. Interest coverage 9.9x.
Net debt
$4.62B
Interest coverage
9.91x
Antero Resources Corporation's profit covers its interest bill about 9.9 times over. which is stronger than most peers shown here.
Watch
Worse cushion
Baseline
Better cushion
AR
BASELINE
Antero Resources Corporation
Total debt $4.62B Interest coverage 9.91x This is the baseline the peer rows are being compared against.
Total debt $2.38B Interest coverage 4.62x -53% vs AR Carries about 2.1x less debt cushion than AR.
Total debt $5.66B Interest coverage 6.87x -31% vs AR Carries about 1.4x less debt cushion than AR.
Total debt $1.02B Interest coverage 8.25x -17% vs AR Carries about 1.2x less debt cushion than AR.
Total debt $5.03B Interest coverage 5.49x -45% vs AR Carries about 1.8x less debt cushion than AR.
Total debt $922.41M Interest coverage 10.23x +3% vs AR Has roughly the same debt cushion as AR.
What you should know
The case for and against AR
3 Rewards
1 Risk
Rewards
-
Revenue grew 16.2% last year.
-
Returns 14.2% on equity, ahead of 33% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Operating margin compressed from 52.2% to 26.0% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
10.32x
Forward P/E
8.18x
P/B
1.33x
P/S
1.91x
EV/EBITDA
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PEG ratio
0.42x
Profitability
How much profit each dollar creates
Gross margin
67.2%
Operating margin
26.0%
Net margin
18.7%
ROE
14.2%
ROA
6.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.55x
Current ratio
0.40x
Quick ratio
0.28x
Total debt
$4.62B
Total cash
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Growth
How the business has been compounding
Revenue TTM
$6.13B
Revenue 5Y CAGR
3.4%
EPS TTM
3.48
EPS 5Y CAGR
-29.4%
Cash flow
How much cash the business throws off
Operating CF TTM
$1.98B
Free CF TTM
$1.24B
FCF margin
20.3%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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