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Antero Resources (AR): Buy, Sell, or Hold Post Q4 Earnings?

AR Cover Image

Antero Resources currently trades at $37.97 and has been a dream stock for shareholders. It’s returned 321% since April 2021, blowing past the S&P 500’s 64.2% gain. The company has also beaten the index over the past six months as its stock price is up 20.2%.

Is now the time to buy Antero Resources, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

Why Is Antero Resources Not Exciting?

We’re glad investors have benefited from the price increase, but we're swiping left on Antero Resources for now. Here are two reasons there are better opportunities than AR and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

Cyclical sectors like Energy often flatter weaker operators during favorable price environments, but a longer-term lens separates those from businesses that can consistently perform across market cycles. Unfortunately, Antero Resources’s 5.4% annualized revenue growth over the last five years was sluggish. This was below our standard for the energy upstream and integrated energy sector.

Antero Resources Quarterly Revenue

2. Shrinking EBITDA Margin

Adjusted EBITDA margin strips out accounting distortions tied to depletion and historical drilling spend, providing a clearer view of the cash-generating power of the underlying asset base before financing and reinvestment decisions.

Analyzing the trend in its profitability, Antero Resources’s EBITDA margin decreased by 1.9 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its EBITDA margin for the trailing 12 months was 31.2%.

Antero Resources Trailing 12-Month EBITDA Margin

Final Judgment

Antero Resources isn’t a terrible business, but it doesn’t pass our bar. With its shares outperforming the market lately, the stock trades at 8.9× forward P/E (or $37.97 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're fairly confident there are better stocks to buy right now. We’d suggest looking at an all-weather company that owns household favorite Taco Bell.

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