TRI Pointe Group, Inc. (NYSE:TPH), on the other hand, is down -8.54% year to date as of 02/23/2018. It currently trades at $16.39 and has returned -5.53% during the past week.
Camber Energy, Inc. (NYSE:CEI) and TRI Pointe Group, Inc. (NYSE:TPH) are the two most active stocks in the market based on today’s trading volumes. Investor interest in the two stocks is clearly very high, but which is the better investment? To answer this question, we will compare the two companies across growth, profitability, risk, and valuation metrics, and also examine their analyst ratings and insider activity trends.
Companies that can increase earnings at a high compound rate over time are attractive to investors. Comparatively, TPH is expected to grow at a 18.96% annual rate. All else equal, TPH’s higher growth rate would imply a greater potential for capital appreciation.
Profitability and Returns
Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return. EBITDA margin of 10.92% for TRI Pointe Group, Inc. (TPH). CEI’s ROI is -245.80% while TPH has a ROI of 6.30%. The interpretation is that TPH’s business generates a higher return on investment than CEI’s.
The amount of free cash flow available to investors is ultimately what determines the value of a stock. CEI’s free cash flow (“FCF”) per share for the trailing twelve months was -0.06. Comparatively, TPH’s free cash flow per share was +0.06. On a percent-of-sales basis, CEI’s free cash flow was -0.11% while TPH converted 0.38% of its revenues into cash flow. This means that, for a given level of sales, TPH is able to generate more free cash flow for investors.
CEI trades at a P/S of 0.74, compared to a forward P/E of 7.60, a P/B of 1.28, and a P/S of 0.91 for TPH. CEI 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
Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. CEI is currently priced at a -91% to its one-year price target of 1.00. Comparatively, TPH is -20.82% relative to its price target of 20.70. This suggests that CEI 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 4.00 for CEI and 2.30 for TPH, which implies that analysts are more bullish on the outlook for CEI.
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. CEI has a beta of 1.02 and TPH’s beta is 1.44. CEI’s shares are therefore the less volatile of the two stocks.
Insider Activity and Investor Sentiment
Comparing the number of shares sold short to the float is a method analysts often use to get a reading on investor sentiment. CEI has a short ratio of 1.11 compared to a short interest of 9.05 for TPH. This implies that the market is currently less bearish on the outlook for CEI.
Camber Energy, Inc. (NYSE:CEI) beats TRI Pointe Group, Inc. (NYSE:TPH) on a total of 8 of the 14 factors compared between the two stocks. CEI higher liquidity and has lower financial risk. In terms of valuation, CEI is the cheaper of the two stocks on an earnings, book value and sales basis, CEI is more undervalued relative to its price target. Finally, CEI has better sentiment signals based on short interest.