AR

We rate ANTERO RESOURCES Corp (AR) as a Reduce with a composite score of 45.5/100 at a current price of $33.83. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (62th percentile) and value (51th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (20th percentile) and investment (26th percentile) tempers our overall conviction. We assign a No Moat rating (29/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ANTERO RESOURCES Corp holds a top-quartile position (#0 of 50) within the Mining sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 45.5/100 places it at rank #2726 in our full 7,333-stock universe. With a $10.4B market capitalization, ANTERO RESOURCES Corp operates at meaningful scale within the Mining sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 24%, though momentum at the 20th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 37% (-6.0pp vs sector) narrow to operating margins of 11% (-1.0pp vs sector) and net margins of 8.8%, yielding a gross-to-net conversion rate of 24%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $33.83, ANTERO RESOURCES Corp is trading near fair value based on current fundamentals. Our value factor score of 51/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 23.8x (a 73% premium to the sector median of 13.7x), EV/EBITDA of 14.2x (at a premium), P/B of 1.4x, P/S of 2.2x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to ANTERO RESOURCES Corp. The stock presents a balanced risk profile: risk factors are within normal ranges. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

We identify no major risk factors at this time. The company's stability factor sits at the 62th percentile with quality at the 43th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: above-average stability (62th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate ANTERO RESOURCES Corp's capital allocation as Poor. Key concerns include suboptimal returns on capital. Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — ANTERO RESOURCES Corp significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, ANTERO RESOURCES Corp receives a Reduce rating with a composite score of 45.5/100 (rank #2726 of 7,333). Our quantitative framework assigns a No Moat (29/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 40/100.

Our analysis does not support a constructive view on ANTERO RESOURCES Corp at this time. The combination of limited competitive advantages, medium uncertainty, and poor capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.