The shares of Emerge Energy Services LP have decreased by more than -35.09% this year alone. The shares recently went down by -4.31% or -$0.36 and now trades at $7.99. The shares of Intrepid Potash, Inc. (NYSE:IPI), has jumped by 78.37% year to date as of 11/21/2017. The shares currently trade at $3.71 and have been able to report a change of 0.27% over the past one week.
The stock of Emerge Energy Services LP and Intrepid Potash, Inc. were two of the most active stocks on Tueday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.
Profitability and Returns
Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using Return on Investment (ROI), which balances the difference in capital structure. The ROI of EMES is -45.90% while that of IPI is -11.40%. These figures suggest that IPI ventures generate a higher ROI than that of EMES.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, EMES’s free cash flow per share is a negative -0.01, while that of IPI is positive 0.
Liquidity and Financial Risk
The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for EMES is 1.50 and that of IPI is 4.70. This implies that it is easier for EMES to cover its immediate obligations over the next 12 months than IPI. The debt ratio of EMES is 4.34 compared to 0.00 for IPI. EMES can be able to settle its long-term debts and thus is a lower financial risk than IPI.
EMES currently trades at a forward P/E of 4.84, a P/B of 5.59, and a P/S of 0.77 while IPI trades at a forward P/E of 78.94, a P/B of 1.16, and a P/S of 2.98. This means that looking at the earnings, book values and sales basis, EMES is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.
Analyst Price Targets and Opinions
The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of EMES is currently at a -29.85% to its one-year price target of 11.39. Looking at its rival pricing, IPI is at a 10.75% relative to its price target of 3.35. This figure implies that over the next one year, IPI is a better investment.
When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), EMES is given a 2.50 while 3.80 placed for IPI. This means that analysts are more bullish on the outlook for IPI stocks.
Insider Activity and Investor Sentiment
Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for EMES is 3.43 while that of IPI is just 5.73. This means that analysts are more bullish on the forecast for EMES stock.
The stock of Emerge Energy Services LP defeats that of Intrepid Potash, Inc. when the two are compared, with EMES taking 6 out of the total factors that were been considered. EMES happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, EMES is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for EMES is better on when it is viewed on short interest.