IAMGOLD Corporation (NYSE:IAG) shares are down more than -14.07% this year and recently increased 2.24% or $0.11 to settle at $5.01. Blue Apron Holdings, Inc. (NYSE:APRN), on the other hand, is down -46.15% year to date as of 03/19/2018. It currently trades at $2.17 and has returned 4.83% during the past week.
IAMGOLD Corporation (NYSE:IAG) and Blue Apron Holdings, Inc. (NYSE:APRN) 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.
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Analysts expect IAG to grow earnings at a 36.95% annual rate over the next 5 years. Comparatively, APRN is expected to grow at a -11.00% annual rate. All else equal, IAG’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. IAMGOLD Corporation (IAG) has an EBITDA margin of 1.6%. This suggests that IAG underlying business is more profitable IAG’s ROI is 14.50% while APRN has a ROI of -54.10%. The interpretation is that IAG’s business generates a higher return on investment than APRN’s.
The amount of free cash flow available to investors is ultimately what determines the value of a stock. IAG’s free cash flow (“FCF”) per share for the trailing twelve months was -0.04. Comparatively, APRN’s free cash flow per share was -0.20. On a percent-of-sales basis, IAG’s free cash flow was -1.7% while APRN converted -0% of its revenues into cash flow. This means that, for a given level of sales, APRN is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Liquidity and leverage ratios provide insight into the financial health of a company, and allow investors to determine the likelihood that the company will be able to continue operating as a going concern. IAG has a current ratio of 5.00 compared to 3.10 for APRN. This means that IAG can more easily cover its most immediate liabilities over the next twelve months. IAG’s debt-to-equity ratio is 0.14 versus a D/E of 0.56 for APRN. APRN is therefore the more solvent of the two companies, and has lower financial risk.
IAG trades at a forward P/E of 35.53, a P/B of 0.84, and a P/S of 2.14, compared to a P/B of 1.85, and a P/S of 0.48 for APRN. IAG is the cheaper of the two stocks on book value basis but is expensive in terms of P/E and P/S ratio. 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. IAG is currently priced at a -34.51% to its one-year price target of 7.65. Comparatively, APRN is -57.45% relative to its price target of 5.10. This suggests that APRN 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 2.20 for IAG and 2.60 for APRN, which implies that analysts are more bullish on the outlook for APRN.
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. IAG has a short ratio of 1.34 compared to a short interest of 4.47 for APRN. This implies that the market is currently less bearish on the outlook for IAG.
IAMGOLD Corporation (NYSE:IAG) beats Blue Apron Holdings, Inc. (NYSE:APRN) on a total of 10 of the 14 factors compared between the two stocks. IAG is growing fastly, is more profitable, generates a higher return on investment, has higher cash flow per share, higher liquidity and has lower financial risk. Finally, IAG has better sentiment signals based on short interest.