The shares of Encana Corporation have decreased by more than -0.85% this year alone. The shares recently went up by 0.09% or $0.01 and now trades at $11.64. The shares of Ominto, Inc. (NASDAQ:OMNT), has jumped by 8.06% year to date as of 11/20/2017. The shares currently trade at $3.89 and have been able to report a change of 5.14% over the past one week.
The stock of Encana Corporation and Ominto, Inc. were two of the most active stocks on Monday. 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 the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. ECA has an EBITDA margin of 54.34%, this implies that the underlying business of ECA is more profitable. The ROI of ECA is -9.60% while that of OMNT is 141.10%. These figures suggest that OMNT ventures generate a higher ROI than that of ECA.
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, ECA’s free cash flow per share is a negative -5.33, while that of OMNT is also a negative -0.02.
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 ECA is 1.60 and that of OMNT is 0.70. This implies that it is easier for ECA to cover its immediate obligations over the next 12 months than OMNT. The debt ratio of ECA is 0.84 compared to 0.00 for OMNT. ECA can be able to settle its long-term debts and thus is a lower financial risk than OMNT.
ECA currently trades at a forward P/E of 18.48, a P/B of 1.63, and a P/S of 2.79 while OMNT trades at a forward P/B of 12.16, and a P/S of 3.35. This means that looking at the earnings, book values and sales basis, ECA 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.
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 ECA is 1.57 while that of OMNT is just 9.56. This means that analysts are more bullish on the forecast for ECA stock.
The stock of Encana Corporation defeats that of Ominto, Inc. when the two are compared, with ECA taking 6 out of the total factors that were been considered. ECA 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, ECA is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for ECA is better on when it is viewed on short interest.