Global

Comparing VEON Ltd. (VEON) and Colony NorthStar, Inc. (CLNS)

VEON Ltd. (NASDAQ:VEON) shares are down more than -40.10% this year and recently increased 1.32% or $0.03 to settle at $2.30. Colony NorthStar, Inc. (NYSE:CLNS), on the other hand, is down -50.22% year to date as of 04/16/2018. It currently trades at $5.68 and has returned 3.65% during the past week.

VEON Ltd. (NASDAQ:VEON) and Colony NorthStar, Inc. (NYSE:CLNS) are the two most active stocks in the Telecom Services – Foreign industry 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.

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 Return on Investment (ROI) as measures of profitability and return. VEON’s ROI is 4.90% while CLNS has a ROI of -0.40%. The interpretation is that VEON’s business generates a higher return on investment than CLNS’s.

Cash Flow

The amount of free cash flow available to investors is ultimately what determines the value of a stock. VEON’s free cash flow (“FCF”) per share for the trailing twelve months was +0.00. Comparatively, CLNS’s free cash flow per share was -. On a percent-of-sales basis, VEON’s free cash flow was 0% while CLNS converted 0% of its revenues into cash flow. This means that, for a given level of sales, VEON is able to generate more free cash flow for investors.

Liquidity and Financial Risk

VEON’s debt-to-equity ratio is 2.67 versus a D/E of 1.59 for CLNS. VEON is therefore the more solvent of the two companies, and has lower financial risk.

Valuation

VEON trades at a forward P/E of 5.25, a P/B of 0.91, and a P/S of 0.45, compared to a P/B of 0.45, and a P/S of 1.04 for CLNS. VEON is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B 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

Just because a stock is cheaper doesn’t mean there’s more value to be had. In order to assess value we need to compare the current price to where it’s likely to trade in the future. VEON is currently priced at a -50.54% to its one-year price target of 4.65. Comparatively, CLNS is -35.45% relative to its price target of 8.80. This suggests that VEON is the better investment over the next year.

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. VEON has a beta of 2.19 and CLNS’s beta is 1.37. CLNS’s shares are therefore the less volatile of the two stocks.

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. VEON has a short ratio of 1.63 compared to a short interest of 2.79 for CLNS. This implies that the market is currently less bearish on the outlook for VEON.

Summary

Colony NorthStar, Inc. (NYSE:CLNS) beats VEON Ltd. (NASDAQ:VEON) on a total of 5 of the 14 factors compared between the two stocks. CLNS generates a higher return on investment. In terms of valuation, CLNS is the cheaper of the two stocks on an earnings and book value, Finally, LB has better sentiment signals based on short interest.

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