Zion Oil & Gas, Inc. (NASDAQ:ZN) shares are up more than 101.39% this year and recently increased 1.16% or $0.05 to settle at $4.35. Hertz Global Holdings, Inc. (NYSE:HTZ), on the other hand, is down -15.34% year to date as of 02/14/2018. It currently trades at $18.71 and has returned -13.22% during the past week.
Zion Oil & Gas, Inc. (NASDAQ:ZN) and Hertz Global Holdings, Inc. (NYSE:HTZ) are the two most active stocks in the market based on today’s trading volumes. Investor interest in the two stocks is clearly very high, but which is the better investment? To answer this question, we will compare the two companies across growth, profitability, risk, and valuation metrics, and also examine their analyst ratings and insider activity trends.
Profitability and Returns
Just, if not more, important than the growth rate is the quality of that growth. Growth can actual be harmful to investors if it comes at the cost of weak profitability and low returns. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. EBITDA margin of -1664.26% for Hertz Global Holdings, Inc. (HTZ).
Earnings don’t always accurately reflect the amount of cash that a company brings in. ZN’s free cash flow (“FCF”) per share for the trailing twelve months was -0.11. Comparatively, HTZ’s free cash flow per share was -12.05.
Liquidity and Financial Risk
ZN’s debt-to-equity ratio is 0.12 versus a D/E of 18.38 for HTZ. HTZ is therefore the more solvent of the two companies, and has lower financial risk.
ZN trades at a P/B of 13.59, compared to a P/B of 1.79, and a P/S of 0.18 for HTZ. ZN is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B ratio. Given that earnings are what matter most to investors, analysts tend to place a greater weight on the P/E.
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. ZN has a beta of 1.02 and HTZ’s beta is 1.89. ZN’s shares are therefore the less volatile of the two stocks.
Insider Activity and Investor Sentiment
Comparing the number of shares sold short to the float is a method analysts often use to get a reading on investor sentiment. ZN has a short ratio of 2.75 compared to a short interest of 6.14 for HTZ. This implies that the market is currently less bearish on the outlook for ZN.
Zion Oil & Gas, Inc. (NASDAQ:ZN) beats Hertz Global Holdings, Inc. (NYSE:HTZ) on a total of 8 of the 12 factors compared between the two stocks. ZN is more profitable, has higher cash flow per share, higher liquidity and has lower financial risk. Finally, ZN has better sentiment signals based on short interest.