Earnings

Comparing Valuation And Performance: RXi Pharmaceuticals Corporation (RXII), Northern Oil and Gas, Inc. (NOG)

The shares of RXi Pharmaceuticals Corporation have decreased by more than -90.81% this year alone. The shares recently went down by -3.58% or -$0.02 and now trades at $0.51. The shares of Northern Oil and Gas, Inc. (NYSE:NOG), has jumped by 84.88% year to date as of 10/10/2018. The shares currently trade at $3.79 and have been able to report a change of -12.47% over the past one week.

The stock of RXi Pharmaceuticals Corporation and Northern Oil and Gas, Inc. were two of the most active stocks on Wednesday. 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. These figures suggest that NOG ventures generate a higher ROI than that of RXII.

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, RXII’s free cash flow per share is a negative -9.85, while that of NOG is also a negative -0.06.

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 RXII is 2.10 and that of NOG is 1.70. This implies that it is easier for RXII to cover its immediate obligations over the next 12 months than NOG.

Valuation

RXII currently trades at a P/B of 0.64, and a P/S of 22.14 while NOG trades at a forward P/E of 6.18, and a P/S of 5.39. This means that looking at the earnings, book values and sales basis, RXII 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 RXII is currently at a -83% to its one-year price target of 3.00. Looking at its rival pricing, NOG is at a -26.69% relative to its price target of 5.17.




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), RXII is given a 2.00 while 2.00 placed for NOG. This means that analysts are equally bullish on their outlook for the two stocks 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 RXII is 0.90 while that of NOG is just 3.19. This means that analysts are more bullish on the forecast for RXII stock.

Conclusion

The stock of RXi Pharmaceuticals Corporation defeats that of Northern Oil and Gas, Inc. when the two are compared, with RXII taking 5 out of the total factors that were been considered. RXII 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, RXII is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for RXII is better on when it is viewed on short interest.

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