Gulfport Energy Corporation (NASDAQ:GPOR) shares are down more than -33.23% this year and recently increased 2.77% or $0.23 to settle at $8.52. Ctrip.com International, Ltd. (NASDAQ:CTRP), on the other hand, is up 1.95% year to date as of 02/14/2018. It currently trades at $44.96 and has returned -2.83% during the past week.
Gulfport Energy Corporation (NASDAQ:GPOR) and Ctrip.com International, Ltd. (NASDAQ:CTRP) are the two most active stocks in the market based on today’s trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.
The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Analysts expect GPOR to grow earnings at a 24.48% annual rate over the next 5 years. Comparatively, CTRP is expected to grow at a 7.40% annual rate. All else equal, GPOR’s higher growth rate would imply a greater potential for capital appreciation.
Profitability and Returns
Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return., compared to an EBITDA margin of 28.77% for Ctrip.com International, Ltd. (CTRP). GPOR’s ROI is -23.50% while CTRP has a ROI of -1.90%. The interpretation is that CTRP’s business generates a higher return on investment than GPOR’s.
Cash is king when it comes to investing. GPOR’s free cash flow (“FCF”) per share for the trailing twelve months was -0.69. Comparatively, CTRP’s free cash flow per share was -. On a percent-of-sales basis, GPOR’s free cash flow was -0.03% while CTRP converted 0% of its revenues into cash flow. This means that, for a given level of sales, CTRP is able to generate more free cash flow for investors.
Liquidity and Financial Risk
Liquidity and leverage ratios are important because they reveal the financial health of a company. GPOR has a current ratio of 0.60 compared to 1.50 for CTRP. This means that CTRP can more easily cover its most immediate liabilities over the next twelve months. GPOR’s debt-to-equity ratio is 0.67 versus a D/E of 0.59 for CTRP. GPOR is therefore the more solvent of the two companies, and has lower financial risk.
GPOR trades at a forward P/E of 6.18, a P/B of 0.53, and a P/S of 1.53, compared to a forward P/E of 37.28, a P/B of 1.86, and a P/S of 5.95 for CTRP. GPOR 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
A cheap stock isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. GPOR is currently priced at a -51.86% to its one-year price target of 17.70. Comparatively, CTRP is -14.78% relative to its price target of 52.76. This suggests that GPOR is the better investment over the next year.
The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.10 for GPOR and 2.10 for CTRP, which implies that analysts are equally bullish on their outlook for the two stocks.
Risk and Volatility
Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. GPOR has a beta of 0.60 and CTRP’s beta is 1.70. GPOR’s shares are therefore the less volatile of the two stocks.
Insider Activity and Investor Sentiment
Short interest, or the percentage of a stock’s tradable shares currently being shorted, is another metric investors use to get a pulse on sentiment.GPOR has a short ratio of 1.89 compared to a short interest of 6.44 for CTRP. This implies that the market is currently less bearish on the outlook for GPOR.
Gulfport Energy Corporation (NASDAQ:GPOR) beats Ctrip.com International, Ltd. (NASDAQ:CTRP) on a total of 8 of the 14 factors compared between the two stocks. GPOR is growing fastly and is more profitable. In terms of valuation, GPOR is the cheaper of the two stocks on an earnings, book value and sales basis, GPOR is more undervalued relative to its price target. Finally, GPOR has better sentiment signals based on short interest.