Global

Set Sail With Asanko Gold Inc. (AKG), Diplomat Pharmacy, Inc. (DPLO)

The shares of Asanko Gold Inc. have increased by more than 5.51% this year alone. The shares recently went up by 7.66% or $0.06 and now trades at $0.75. The shares of Diplomat Pharmacy, Inc. (NYSE:DPLO), has jumped by 24.71% year to date as of 01/11/2018. The shares currently trade at $25.03 and have been able to report a change of 20.51% over the past one week.

The stock of Asanko Gold Inc. and Diplomat Pharmacy, Inc. were two of the most active stocks on Thursday. 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. The ROI of AKG is -2.20% while that of DPLO is 4.70%. These figures suggest that DPLO ventures generate a higher ROI than that of AKG.



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, AKG’s free cash flow per share is a positive 0, while that of DPLO is positive 0.58.

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 AKG is 1.70 and that of DPLO is 1.30. This implies that it is easier for AKG to cover its immediate obligations over the next 12 months than DPLO. The debt ratio of AKG is 0.36 compared to 0.23 for DPLO. AKG can be able to settle its long-term debts and thus is a lower financial risk than DPLO.

Valuation

AKG currently trades at a P/B of 0.35, and a P/S of 0.62 while DPLO trades at a forward P/E of 25.91, a P/B of 2.64, and a P/S of 0.35. This means that looking at the earnings, book values and sales basis, AKG 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 AKG is currently at a -40.94% to its one-year price target of 1.27. Looking at its rival pricing, DPLO is at a 24.59% relative to its price target of 20.09. This figure implies that over the next one year, DPLO is a better investment.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), AKG is given a 3.10 while 2.60 placed for DPLO. This means that analysts are more bullish on the outlook for AKG stocks.

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 AKG is 2.25 while that of DPLO is just 8.46. This means that analysts are more bullish on the forecast for AKG stock.

Conclusion

The stock of Asanko Gold Inc. defeats that of Diplomat Pharmacy, Inc. when the two are compared, with AKG taking 5 out of the total factors that were been considered. AKG 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, AKG is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for AKG is better on when it is viewed on short interest.

 

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