Q: Peyto has been significantly outperforming Arc over the last year and beyond. Which company is likely to outperform in terms of total return over the medium term and why?
Thanks, Hugh
Thanks, Hugh
5i Research Answer:
ARX is larger, by far, but investors seem attracted to PEY's much higher dividend right now. Valuations are similar. It's a tough call. PEY has hedges in place, which protect its dividend somewhat but can limit investor interest in a natural gas rally. ARX, meanwhile, has a much stronger balance sheet. We would side with ARX here but in a very close call.