Kimco Realty Corporation (NYSE:KIM) shares are down more than -21.43% this year and recently decreased -0.56% or -$0.08 to settle at $14.26. Yandex N.V. (NASDAQ:YNDX), on the other hand, is up 18.75% year to date as of 02/14/2018. It currently trades at $38.89 and has returned 5.16% during the past week.
Kimco Realty Corporation (NYSE:KIM) and Yandex N.V. (NASDAQ:YNDX) are the two most active stocks in the market based on today’s trading volumes. To determine if one is a better investment than the other, we will compare the two companies’ growth, profitability, risk, return, and valuation characteristics, as well as their analyst ratings and sentiment signals.
Companies that can increase earnings at a high compound rate over time are attractive to investors. Analysts expect KIM to grow earnings at a 4.60% annual rate over the next 5 years. Comparatively, YNDX is expected to grow at a 0.42% annual rate. All else equal, KIM’s higher growth rate would imply a greater potential for capital appreciation.
Profitability and Returns
Growth in and of itself is not necessarily valuable, and it can even be harmful to shareholders if companies overinvest in unprofitable projects in pursuit of that growth. We will use EBITDA margin and Return on Investment (ROI), which adjust for differences in capital structure, as measure of profitability and return. , compared to an EBITDA margin of 37.38% for Yandex N.V. (YNDX). KIM’s ROI is 1.80% while YNDX has a ROI of 8.90%. The interpretation is that YNDX’s business generates a higher return on investment than KIM’s.
Earnings don’t always accurately reflect the amount of cash that a company brings in. KIM’s free cash flow (“FCF”) per share for the trailing twelve months was -0.05. Comparatively, YNDX’s free cash flow per share was +0.05. On a percent-of-sales basis, KIM’s free cash flow was -1.82% while YNDX converted 1.3% of its revenues into cash flow. This means that, for a given level of sales, YNDX is able to generate more free cash flow for investors.
Liquidity and Financial Risk
KIM’s debt-to-equity ratio is 1.06 versus a D/E of 0.22 for YNDX. KIM is therefore the more solvent of the two companies, and has lower financial risk.
KIM trades at a forward P/E of 23.57, a P/B of 1.16, and a P/S of 5.07, compared to a forward P/E of 35.39, a P/B of 8.98, and a P/S of 8.22 for YNDX. KIM is the cheaper 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. KIM is currently priced at a -27.24% to its one-year price target of 19.60. Comparatively, YNDX is 6.2% relative to its price target of 36.62. This suggests that KIM 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 2.60 for KIM and 2.10 for YNDX, which implies that analysts are more bullish on the outlook for KIM.
Risk and Volatility
To gauge the market risk of a particular stock, investors use beta. Stocks with a beta above 1 are more volatile than the market as a whole. Conversely, a beta below 1 implies below average systematic risk. KIM has a beta of 0.58 and YNDX’s beta is 2.56. KIM’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. KIM has a short ratio of 3.34 compared to a short interest of 0.70 for YNDX. This implies that the market is currently less bearish on the outlook for YNDX.
Yandex N.V. (NASDAQ:YNDX) beats Kimco Realty Corporation (NYSE:KIM) on a total of 7 of the 14 factors compared between the two stocks. YNDX is growing fastly, has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk. In terms of valuation, KIM is the cheaper of the two stocks on an earnings, book value and sales basis, Finally, YNDX has better sentiment signals based on short interest.