Antero Resources Corporation

Technical Analysis

AR shows stable, modest gains with positive near-term momentum while trading below its yearly midpoint. It has outperformed the broader market slightly over the past month and maintains low volatility, supported by its beta of 0.52. Positioned 20% below its annual high and 37% above its low, it presents balanced technical conditions without being overbought or oversold.

Fundamentals

The company delivered impressive quarterly growth, with revenue up 22% and margins expanding significantly, pointing to stronger operational efficiency. While profitability metrics like ROE remain modest, the balance sheet reflects moderate leverage with satisfactory interest coverage, though liquidity is a point to monitor given the low current ratio. Overall, fundamentals show clear operational momentum despite some efficiency challenges.

Valuation

AR appears attractively valued based on forward-looking metrics, with a low forward PE of 13.8 and a notably compelling PEG ratio of 0.09 suggesting strong growth relative to price. While the EV/EBITDA is elevated, the overall valuation profile supports a positive outlook, especially considering the discount from trailing earnings to forward projections.

Risk

Risk is moderate, as AR's below-market beta indicates lower sensitivity to market swings, though the significant past drawdown highlights potential volatility. The absence of high short interest reduces near-term downside pressure from bearish sentiment, but investors should remain mindful of liquidity and execution risks given the operational turnaround phase.

Investment Recommendation

AR presents a compelling opportunity based on improving fundamentals, reasonable valuation, and steady technical momentum. The strong margin expansion and attractive PEG ratio signal growth potential at a reasonable price. Given the balanced risk-reward profile, it warrants consideration for investors seeking modest exposure to a company demonstrating operational turnaround. However, prudent risk management is advised given moderate volatility and liquidity metrics.

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis, the 12-month outlook for AR is cautiously optimistic. Key catalysts will be the continuation of its impressive operational turnaround, particularly the sustained revenue growth (up 22% last quarter) and significant margin expansion, which are not yet fully reflected in its attractive valuation. The primary risks to monitor are the company's liquidity position, indicated by the low current ratio, and its ability to maintain this high growth trajectory without faltering. Given the compelling PEG ratio of 0.09 and positive momentum, a reasonable target price range could be $40-$48, representing a potential upside of 15-35% from the current level, as the market rewards continued execution.

Wall Street Consensus

Most Wall Street analysts are optimistic about Antero Resources Corporation's 12-month outlook, with consensus target around $35.03, indicating expected upside potential.

Overall, AR has investment potential but also faces challenges. Here are key factors to weigh before investing.

AR has demonstrated modest gains with low volatility relative to the broader market. The stock shows positive momentum in the near term while trading below its annual midpoint.

Short-term performance reveals solid one-month gains of 6.57%, though three-month returns remain modest at 2.01%. The stock has slightly outperformed the market over this period, as indicated by the positive relative strength, while exhibiting below-average volatility with its beta of 0.522.

Currently trading at $35.03, AR sits approximately 37% above its 52-week low but remains 20% below its annual high, suggesting neither overbought nor oversold conditions. The significant 31.77% maximum drawdown indicates the stock has experienced substantial volatility within its trading range over the past year.

Revenue & Profitability AR demonstrated strong sequential improvement with Q4 revenue growing 22% quarter-over-quarter to $1.43 billion. Profitability metrics showed significant enhancement as gross profit margin expanded from 13.7% to 26.1% and net profit margin doubled to 13.5%, indicating improved operational leverage and cost management. The company maintained a healthy EBITDA margin of 35.3% in Q4, reflecting solid core operating performance.

Financial Health The company maintains moderate leverage with a debt ratio of 36% and debt-to-equity of 0.68, though the current ratio of 0.55 indicates potential liquidity constraints. Operating cash flow coverage appears adequate with an interest coverage ratio of 14.4x, but the cash flow to debt ratio of 0.07 suggests limited cash generation relative to debt obligations. The capital structure remains balanced with long-term debt comprising 28% of total capitalization.

Operational Efficiency AR's operational efficiency shows room for improvement with an ROE of 2.6% and asset turnover of 0.10, indicating suboptimal utilization of both equity and assets. The fixed asset turnover of 0.13 is particularly low, suggesting underutilized capital investments. However, the cash conversion cycle of 19 days demonstrates effective working capital management, though overall profitability metrics remain modest relative to the asset base.

Based on the PE ratios, AR appears reasonably valued with a forward PE of 13.8 suggesting stronger earnings growth ahead. While the TTM PE of 20.8 is elevated, the significant discount to forward earnings indicates improving profitability. The extremely low PEG ratio of 0.09 strongly signals undervaluation relative to earnings growth potential.

Without industry average data for direct comparison, valuation assessment relies on absolute metrics. The PB ratio of 1.35 appears reasonable, though the elevated EV/EBITDA of 30.8 suggests the market may be pricing in future growth expectations. The combination of low forward PE and exceptional PEG ratio presents a compelling valuation picture despite the absence of peer benchmarks.

Volatility Risk: AR exhibits moderate volatility risk, with a beta of 0.522 indicating lower sensitivity to broader market swings than the average stock. However, its one-year maximum drawdown of -31.77% reveals significant standalone price depreciation risk, demonstrating considerable downside potential despite the lower beta.

Other Risks: The absence of reported short interest suggests a lack of significant active skepticism from short sellers, which can be viewed positively. However, this lack of a visible short base does not eliminate other potential risks, such as sector-specific headwinds or liquidity constraints that are not directly captured by this single metric.