Global

Comparing T. Rowe Price Group, Inc. (TROW) and Camber Energy, Inc. (CEI)

T. Rowe Price Group, Inc. (NASDAQ:TROW) shares are up more than 15.08% this year and recently increased 3.08% or $3.61 to settle at $120.75. Camber Energy, Inc. (NYSE:CEI), on the other hand, is down -87.44% year to date as of 05/16/2018. It currently trades at $0.38 and has returned -12.82% during the past week.

T. Rowe Price Group, Inc. (NASDAQ:TROW) and Camber Energy, Inc. (NYSE:CEI) are the two most active stocks in the Asset Management industry based on today’s trading volumes. The market is clearly enthusiastic about both these stocks, but which is the better investment? To answer this, we will compare the two companies based on the strength of their growth, profitability, risk, returns, valuation, analyst recommendations, and insider trends.

Growth

One of the key things investors look for in a company is the ability to grow earnings at a high compound rate over time. Analysts expect TROW to grow earnings at a 13.10% annual rate over the next 5 years.

Profitability and Returns

Growth doesn’t mean much if it comes at the cost of weak profitability. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. T. Rowe Price Group, Inc. (TROW) has an EBITDA margin of 26.09%. This suggests that TROW underlying business is more profitable TROW’s ROI is 21.60% while CEI has a ROI of -245.80%. The interpretation is that TROW’s business generates a higher return on investment than CEI’s.

Cash Flow



Earnings don’t always accurately reflect the amount of cash that a company brings in. TROW’s free cash flow (“FCF”) per share for the trailing twelve months was +2.05. Comparatively, CEI’s free cash flow per share was -1.42. On a percent-of-sales basis, TROW’s free cash flow was 10.36% while CEI converted -0.11% of its revenues into cash flow. This means that, for a given level of sales, TROW is able to generate more free cash flow for investors.

Valuation

TROW trades at a forward P/E of 15.84, a P/B of 5.00, and a P/S of 5.76, compared to a P/S of 0.21 for CEI. TROW is the expensive 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. TROW is currently priced at a 1.4% to its one-year price target of 119.08. Comparatively, CEI is -62% relative to its price target of 1.00. This suggests that CEI is the better investment over the next year.

Risk and Volatility

To gauge the market risk of a particular stock, investors use beta. Stocks with a beta above 1 are more volatile than the market as a whole. Conversely, a beta below 1 implies below average systematic risk. TROW has a beta of 1.22 and CEI’s beta is 1.39. TROW’s shares are therefore the less volatile of the two stocks.

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. TROW has a short ratio of 5.08 compared to a short interest of 0.59 for CEI. This implies that the market is currently less bearish on the outlook for CEI.

Summary




Camber Energy, Inc. (NYSE:CEI) beats T. Rowe Price Group, Inc. (NASDAQ:TROW) on a total of 7 of the 14 factors compared between the two stocks. CEI is growing fastly 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.

Previous ArticleNext Article

Related Post

Which of these 2 stocks can turn out to be absolut... The shares of Freeport-McMoRan Inc. have decreased by more than -7.33% this year alone. The shares of Teva Pharmaceutical Industries Limited (NYSE:TEV...
Comparing Valuation And Performance: United States...   The shares of United States Steel Corporation have increased by more than 14.35% this year alone. The shares recently went down by -7.64% or...
A Comparison of Top Movers: Johnson & Johnson... The shares of Johnson & Johnson have increased by more than 4.32% this year alone. The shares recently went up by 0.67% or $0.97 and now trades at...
Why You Should Still Hold BioDelivery Sciences Int... BioDelivery Sciences International, Inc. (NASDAQ:BDSI) fell by -5.26% in Monday’s trading session from $2.85 to $2.70 and has now fallen 3 consecutive...
Uncovering the next great stocks: Pandora Media, I... The shares of Pandora Media, Inc. have increased by more than 3.73% this year alone. The shares recently went down by -3.29% or -$0.17 and now trades ...