Earnings

Which of 2 stocks would appeal to long-term investors? Edison International (EIX), Coeur Mining, Inc. (CDE)

The shares of Edison International have increased by more than 0.32% this year alone. The shares recently went up by 0.95% or $0.6 and now trades at $63.44. The shares of Coeur Mining, Inc. (NYSE:CDE), has jumped by 15.20% year to date as of 04/13/2018. The shares currently trade at $8.64 and have been able to report a change of 7.06% over the past one week.

The stock of Edison International and Coeur Mining, Inc. were two of the most active stocks on Friday. 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. EIX has an EBITDA margin of 25.81%, this implies that the underlying business of CDE is more profitable. The ROI of EIX is 6.40% while that of CDE is 1.90%. These figures suggest that EIX ventures generate a higher ROI than that of CDE.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, EIX’s free cash flow per share is a negative -3.62, while that of CDE is positive 0.01.

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 EIX is 0.50 and that of CDE is 2.00. This implies that it is easier for EIX to cover its immediate obligations over the next 12 months than CDE. The debt ratio of EIX is 1.24 compared to 0.50 for CDE. EIX can be able to settle its long-term debts and thus is a lower financial risk than CDE.

Valuation

EIX currently trades at a forward P/E of 13.98, a P/B of 1.77, and a P/S of 1.68 while CDE trades at a forward P/E of 24.62, a P/B of 1.91, and a P/S of 2.21. This means that looking at the earnings, book values and sales basis, EIX 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 EIX is currently at a -7.12% to its one-year price target of 68.30. Looking at its rival pricing, CDE is at a -15.71% relative to its price target of 10.25.




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), EIX is given a 2.30 while 2.10 placed for CDE. This means that analysts are more bullish on the outlook for EIX 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 EIX is 2.19 while that of CDE is just 3.05. This means that analysts are more bullish on the forecast for EIX stock.

Conclusion

The stock of Edison International defeats that of Coeur Mining, Inc. when the two are compared, with EIX taking 7 out of the total factors that were been considered. EIX 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, EIX is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for EIX is better on when it is viewed on short interest.

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