Earnings

Which Market Offer More Value? – Exxon Mobil Corporation (XOM), PEDEVCO Corp. (PED)

The shares of Exxon Mobil Corporation have decreased by more than -2.55% this year alone. The shares recently went down by -1.10% or -$0.91 and now trades at $81.51. The shares of PEDEVCO Corp. (NYSE:PED), has slumped by -1.07% year to date as of 06/13/2018. The shares currently trade at $0.32 and have been able to report a change of 2.49% over the past one week.

The stock of Exxon Mobil Corporation and PEDEVCO Corp. were two of the most active stocks on Wednesday. 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. XOM has an EBITDA margin of 16.03%, this implies that the underlying business of XOM is more profitable. The ROI of XOM is 3.20% while that of PED is -78.60%. These figures suggest that XOM ventures generate a higher ROI than that of PED.

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, XOM’s free cash flow per share is a positive 0.76.

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 XOM is 0.80 and that of PED is 0.40. This implies that it is easier for XOM to cover its immediate obligations over the next 12 months than PED.

Valuation

XOM currently trades at a forward P/E of 15.53, a P/B of 1.85, and a P/S of 1.44 while PED trades at a P/S of 0.67. This means that looking at the earnings, book values and sales basis, XOM 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 XOM is currently at a -7.15% to its one-year price target of 87.79. Looking at its rival pricing, PED is at a -99.64% relative to its price target of 90.00.

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 XOM is 2.62 while that of PED is just 0.54. This means that analysts are more bullish on the forecast for PED stock.

Conclusion

The stock of Exxon Mobil Corporation defeats that of PEDEVCO Corp. when the two are compared, with XOM taking 6 out of the total factors that were been considered. XOM 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, XOM is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for XOM is better on when it is viewed on short interest.

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