Liberty TripAdvisor Holdings, Inc. (NASDAQ:LTRPA) shares are up more than 35.28% this year and recently increased 3.24% or $0.4 to settle at $12.75. Crocs, Inc. (NASDAQ:CROX), on the other hand, is up 28.24% year to date as of 05/16/2018. It currently trades at $16.21 and has returned 3.18% during the past week.
Liberty TripAdvisor Holdings, Inc. (NASDAQ:LTRPA) and Crocs, Inc. (NASDAQ:CROX) are the two most active stocks in the Recreational Goods, Other 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 consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Comparatively, CROX is expected to grow at a 10.00% annual rate. All else equal, CROX’s higher growth rate would imply a greater potential for capital appreciation.Profitability and Returns
Growth in and of itself is not necessarily valuable, and it can even be harmful to shareholders if companies overinvest in unprofitable projects in pursuit of that growth. We will use EBITDA margin and Return on Investment (ROI), which adjust for differences in capital structure, as measure of profitability and return. EBITDA margin of 6.02% for Crocs, Inc. (CROX). LTRPA’s ROI is -145.60% while CROX has a ROI of 5.40%. The interpretation is that CROX’s business generates a higher return on investment than LTRPA’s.Cash Flow
Cash is king when it comes to investing. LTRPA’s free cash flow (“FCF”) per share for the trailing twelve months was +2.11. Comparatively, CROX’s free cash flow per share was -0.72. On a percent-of-sales basis, LTRPA’s free cash flow was 10.1% while CROX converted -4.8% of its revenues into cash flow. This means that, for a given level of sales, LTRPA is able to generate more free cash flow for investors.Liquidity and Financial Risk
Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. LTRPA has a current ratio of 1.90 compared to 2.50 for CROX. This means that CROX can more easily cover its most immediate liabilities over the next twelve months. LTRPA’s debt-to-equity ratio is 1.25 versus a D/E of 0.00 for CROX. LTRPA is therefore the more solvent of the two companies, and has lower financial risk.Valuation
LTRPA trades at a P/B of 2.47, and a P/S of 0.59, compared to a forward P/E of 21.73, a P/B of 6.07, and a P/S of 1.05 for CROX. LTRPA is the cheaper 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
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. LTRPA is currently priced at a -28.65% to its one-year price target of 17.87. Comparatively, CROX is 14.4% relative to its price target of 14.17. This suggests that LTRPA is the better investment over the next year.
Risk and Volatility
Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. LTRPA has a beta of 1.48 and CROX’s beta is 0.27. CROX’s shares are therefore the less volatile of the two stocks.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. LTRPA has a short ratio of 2.53 compared to a short interest of 4.64 for CROX. This implies that the market is currently less bearish on the outlook for LTRPA.Summary
Crocs, Inc. (NASDAQ:CROX) beats Liberty TripAdvisor Holdings, Inc. (NASDAQ:LTRPA) on a total of 7 of the 14 factors compared between the two stocks. CROX has higher cash flow per share, is more profitable, generates a higher return on investment, higher liquidity and has lower financial risk. In terms of valuation, LTRPA is the cheaper of the two stocks on an earnings, book value and sales basis, Finally, CHS has better sentiment signals based on short interest.