Gulfport Energy Corporation (NASDAQ:GPOR) shares are down more than -36.83% this year and recently increased 0.74% or $0.1 to settle at $13.67. Murphy Oil Corporation (NYSE:MUR), on the other hand, is down -18.34% year to date as of 10/24/2017. It currently trades at $25.42 and has returned -1.97% during the past week.

Gulfport Energy Corporation (NASDAQ:GPOR) and Murphy Oil Corporation (NYSE:MUR) are the two most active stocks in the Independent Oil & Gas 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 GPOR to grow earnings at a 30.00% annual rate over the next 5 years.

**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 70.08% for Murphy Oil Corporation (MUR). GPOR’s ROI is -23.50% while MUR has a ROI of -1.10%. The interpretation is that MUR’s business generates a higher return on investment than GPOR’s.

**Cash Flow **

The value of a stock is simply the present value of its future free cash flows. GPOR’s free cash flow (“FCF”) per share for the trailing twelve months was -0.76. Comparatively, MUR’s free cash flow per share was +0.13. On a percent-of-sales basis, GPOR’s free cash flow was -0.04% while MUR converted 1.2% of its revenues into cash flow. This means that, for a given level of sales, MUR is able to generate more free cash flow for investors.

**Liquidity and Financial Risk**

Analysts look at liquidity and leverage ratios to assess how easily a company can cover its liabilities. GPOR has a current ratio of 0.60 compared to 1.10 for MUR. This means that MUR can more easily cover its most immediate liabilities over the next twelve months. GPOR’s debt-to-equity ratio is 0.62 versus a D/E of 0.59 for MUR. GPOR is therefore the more solvent of the two companies, and has lower financial risk.

**Valuation**

GPOR trades at a forward P/E of 9.25, a P/B of 0.86, and a P/S of 2.70, compared to a forward P/E of 160.89, a P/B of 0.88, and a P/S of 2.22 for MUR. 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 is not necessarily a value stock. Most of the time, a stock is cheap for good reason. A stock only has value if the current price is substantially below the price at which it should trade in the future. GPOR is currently priced at a -31.79% to its one-year price target of 20.04. Comparatively, MUR is -6.1% relative to its price target of 27.07. This suggests that GPOR is the better investment over the next year.

The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.00 for GPOR and 3.00 for MUR, which implies that analysts are more bullish on the outlook for MUR.

**Risk and Volatility**

Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. GPOR has a beta of 0.70 and MUR’s beta is 2.30. GPOR’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. GPOR has a short ratio of 1.86 compared to a short interest of 10.10 for MUR. This implies that the market is currently less bearish on the outlook for GPOR.

**Summary**

Murphy Oil Corporation (NYSE:MUR) beats Gulfport Energy Corporation (NASDAQ:GPOR) on a total of 7 of the 14 factors compared between the two stocks. MUR is growing fastly, generates a higher return on investment, has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk. Finally, LPI has better sentiment signals based on short interest.