The shares of Gold Fields Limited have decreased by more than -9.07% this year alone. The shares recently went up by 3.71% or $0.14 and now trades at $3.91. The shares of Vermillion, Inc. (NASDAQ:VRML), has slumped by -42.60% year to date as of 04/13/2018. The shares currently trade at $1.11 and have been able to report a change of -7.68% over the past one week.
The stock of Gold Fields Limited and Vermillion, Inc. were two of the most active stocks on Friday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.Profitability and Returns
Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. The ROI of GFI is 4.80% while that of VRML is -204.70%. These figures suggest that GFI ventures generate a higher ROI than that of VRML.Cash Flow
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, GFI’s free cash flow per share is a positive 67.86, while that of VRML is negative -0.08.Liquidity and Financial Risk
The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for GFI is 1.30 and that of VRML is 2.40. This implies that it is easier for GFI to cover its immediate obligations over the next 12 months than VRML. The debt ratio of GFI is 0.54 compared to 0.50 for VRML. GFI can be able to settle its long-term debts and thus is a lower financial risk than VRML.Valuation
GFI currently trades at a forward P/E of 10.77, a P/B of 0.98, and a P/S of 1.13 while VRML trades at a P/B of 18.47, and a P/S of 25.13. This means that looking at the earnings, book values and sales basis, GFI is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.Analyst Price Targets and Opinions
The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of GFI is currently at a -9.07% to its one-year price target of 4.30. Looking at its rival pricing, VRML is at a -50.67% relative to its price target of 2.25.
When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), GFI is given a 3.00 while 1.00 placed for VRML. This means that analysts are more bullish on the outlook for GFI stocks.Insider Activity and Investor Sentiment
Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for GFI is 1.41 while that of VRML is just 16.39. This means that analysts are more bullish on the forecast for GFI stock.
The stock of Vermillion, Inc. defeats that of Gold Fields Limited when the two are compared, with VRML taking 5 out of the total factors that were been considered. VRML happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, VRML is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for VRML is better on when it is viewed on short interest.