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Comparing Helios and Matheson Analytics Inc. (HMNY) and Smart Sand, Inc. (SND)

Helios and Matheson Analytics Inc. (NASDAQ:HMNY) shares are down more than -89.21% this year and recently increased 4.43% or $0.03 to settle at $0.68. Smart Sand, Inc. (NASDAQ:SND), on the other hand, is down -20.44% year to date as of 05/16/2018. It currently trades at $6.89 and has returned -13.33% during the past week.

Helios and Matheson Analytics Inc. (NASDAQ:HMNY) and Smart Sand, Inc. (NASDAQ:SND) are the two most active stocks in the Information Technology Services 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.

Growth

Companies that can increase earnings at a high compound rate over time are attractive to investors. Comparatively, SND is expected to grow at a 39.61% annual rate. All else equal, SND’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., compared to an EBITDA margin of 18.13% for Smart Sand, Inc. (SND). HMNY’s ROI is 171.20% while SND has a ROI of 6.80%. The interpretation is that HMNY’s business generates a higher return on investment than SND’s.

Cash Flow



If there’s one thing investors care more about than earnings, it’s cash flow. HMNY’s free cash flow (“FCF”) per share for the trailing twelve months was -1.99. Comparatively, SND’s free cash flow per share was -1.20. On a percent-of-sales basis, HMNY’s free cash flow was -1.01% while SND converted -0.04% of its revenues into cash flow. This means that, for a given level of sales, SND is able to generate more free cash flow for investors.

Liquidity and Financial Risk

Balance sheet risk is one of the biggest factors to consider before investing. HMNY has a current ratio of 0.30 compared to 2.10 for SND. This means that SND can more easily cover its most immediate liabilities over the next twelve months.

Valuation

HMNY trades at a P/S of 4.18, compared to a forward P/E of 5.65, a P/B of 1.47, and a P/S of 2.56 for SND. 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. HMNY is currently priced at a -94.33% to its one-year price target of 12.00. Comparatively, SND is -24.86% relative to its price target of 9.17. This suggests that HMNY is the better investment over the next year.

Insider Activity and Investor Sentiment

Short interest is another tool that analysts use to gauge investor sentiment. It represents the percentage of a stock’s tradable shares that are being shorted. HMNY has a short ratio of 1.94 compared to a short interest of 5.04 for SND. This implies that the market is currently less bearish on the outlook for HMNY.

Summary




Smart Sand, Inc. (NASDAQ:SND) beats Helios and Matheson Analytics Inc. (NASDAQ:HMNY) on a total of 7 of the 14 factors compared between the two stocks. SND is more profitable, has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk.

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