eBay Inc. (NASDAQ:EBAY) shares are down more than -9.62% this year and recently decreased -10.12% or -$3.84 to settle at $34.11. Inpixon (NASDAQ:INPX), on the other hand, is down -97.45% year to date as of 07/19/2018. It currently trades at $0.16 and has returned 7.37% during the past week.
eBay Inc. (NASDAQ:EBAY) and Inpixon (NASDAQ:INPX) are the two most active stocks in the Specialty Retail, Other industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.Growth
The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Analysts expect EBAY to grow earnings at a 16.36% annual rate over the next 5 years. Comparatively, INPX is expected to grow at a 20.00% annual rate. All else equal, INPX’s higher growth rate would imply a greater potential for capital appreciation.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. eBay Inc. (EBAY) has an EBITDA margin of 30.89%. This suggests that EBAY underlying business is more profitableCash Flow
The amount of free cash flow available to investors is ultimately what determines the value of a stock. EBAY’s free cash flow (“FCF”) per share for the trailing twelve months was +0.33. Comparatively, INPX’s free cash flow per share was -2.62. On a percent-of-sales basis, EBAY’s free cash flow was 3.43% while INPX converted -0.11% of its revenues into cash flow. This means that, for a given level of sales, EBAY is able to generate more free cash flow for investors.Liquidity and Financial Risk
Liquidity and leverage ratios provide insight into the financial health of a company, and allow investors to determine the likelihood that the company will be able to continue operating as a going concern. EBAY has a current ratio of 2.60 compared to 0.40 for INPX. This means that EBAY can more easily cover its most immediate liabilities over the next twelve months.Valuation
EBAY trades at a forward P/E of 13.09, a P/B of 4.54, and a P/S of 3.36, compared to a P/S of 0.08 for INPX. EBAY is the expensive of the two stocks on an earnings, book value and sales basis. 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
A cheap stock isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. EBAY is currently priced at a -28.98% to its one-year price target of 48.03.
Risk and Volatility
Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. EBAY has a beta of 1.29 and INPX’s beta is 2.93. EBAY’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. EBAY has a short ratio of 2.87 compared to a short interest of 0.93 for INPX. This implies that the market is currently less bearish on the outlook for INPX.Summary
eBay Inc. (NASDAQ:EBAY) beats Inpixon (NASDAQ:INPX) on a total of 7 of the 13 factors compared between the two stocks. EBAY is more profitable, generates a higher return on investment, has higher cash flow per share, has a higher cash conversion rate and higher liquidity.