Tengasco, Inc. (NYSE:TGC), on the other hand, is down -7.14% year to date as of 12/05/2017. It currently trades at $0.68 and has returned 11.86% during the past week.
Contango Oil & Gas Company (NYSE:MCF) and Tengasco, Inc. (NYSE:TGC) are the two most active stocks in the Independent Oil & Gas industry based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.
Profitability and Returns
A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use EBITDA margin and Return on Investment (ROI) to measure this., compared to an EBITDA margin of 1.11% for Tengasco, Inc. (TGC). MCF’s ROI is -18.50% while TGC has a ROI of -70.70%. The interpretation is that MCF’s business generates a higher return on investment than TGC’s.
Earnings don’t always accurately reflect the amount of cash that a company brings in. MCF’s free cash flow (“FCF”) per share for the trailing twelve months was -0.34. Comparatively, TGC’s free cash flow per share was +0.02. On a percent-of-sales basis, MCF’s free cash flow was -0.01% while TGC converted 0% of its revenues into cash flow. This means that, for a given level of sales, TGC is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Liquidity and leverage ratios are important because they reveal the financial health of a company. MCF has a current ratio of 0.30 compared to 2.50 for TGC. This means that TGC can more easily cover its most immediate liabilities over the next twelve months. MCF’s debt-to-equity ratio is 0.35 versus a D/E of 0.02 for TGC. MCF is therefore the more solvent of the two companies, and has lower financial risk.
MCF trades at a P/B of 0.28, and a P/S of 0.81, compared to a P/B of 1.30, and a P/S of 1.36 for TGC. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Analyst Price Targets and Opinions
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. MCF is currently priced at a -57.81% to its one-year price target of 6.21. Risk and Volatility
Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. MCF has a beta of 1.94 and TGC’s beta is 0.45. TGC’s shares are therefore the less volatile of the two stocks.
Insider Activity and Investor Sentiment
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. MCF has a short ratio of 0.56 compared to a short interest of 0.51 for TGC. This implies that the market is currently less bearish on the outlook for TGC.
Tengasco, Inc. (NYSE:TGC) beats Contango Oil & Gas Company (NYSE:MCF) on a total of 7 of the 13 factors compared between the two stocks. TGC is more profitable, has a higher cash conversion rate, higher liquidity and has lower financial risk. Finally, TGC has better sentiment signals based on short interest.