Liberty Global plc (NASDAQ:LBTYK) shares are down more than -4.64% this year and recently decreased -2.24% or -$0.74 to settle at $32.27. Alliant Energy Corporation (NYSE:LNT), on the other hand, is down -6.71% year to date as of 02/19/2018. It currently trades at $39.75 and has returned 3.46% during the past week.
Liberty Global plc (NASDAQ:LBTYK) and Alliant Energy Corporation (NYSE:LNT) are the two most active stocks in the market 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.
One of the key things investors look for in a company is the ability to grow earnings at a high compound rate over time. Comparatively, LNT is expected to grow at a 5.55% annual rate. All else equal, LNT’s higher growth rate would imply a greater potential for capital appreciation.
Profitability and Returns
Just, if not more, important than the growth rate is the quality of that growth. Growth can actual be harmful to investors if it comes at the cost of weak profitability and low returns. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. EBITDA margin of 21.75% for Alliant Energy Corporation (LNT).
The amount of free cash flow available to investors is ultimately what determines the value of a stock. LBTYK’s free cash flow (“FCF”) per share for the trailing twelve months was +1.90. Comparatively, LNT’s free cash flow per share was -0.58. On a percent-of-sales basis, LBTYK’s free cash flow was 7.79% while LNT converted -4.04% of its revenues into cash flow. This means that, for a given level of sales, LBTYK is able to generate more free cash flow for investors.
LBTYK trades at a P/B of 2.90, and a P/S of 1.00, compared to a forward P/E of 18.83, a P/B of 2.21, and a P/S of 2.76 for LNT. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
Insider Activity and Investor Sentiment
Short interest, or the percentage of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment.LBTYK has a short ratio of 3.19 compared to a short interest of 5.49 for LNT. This implies that the market is currently less bearish on the outlook for LBTYK.
Liberty Global plc (NASDAQ:LBTYK) beats Alliant Energy Corporation (NYSE:LNT) on a total of 8 of the 13 factors compared between the two stocks. LBTYK has higher cash flow per share, has a higher cash conversion rate and has lower financial risk. In terms of valuation, LBTYK is the cheaper of the two stocks on an earnings and sales basis, Finally, LBTYK has better sentiment signals based on short interest.