Earnings

Comparing Valuation And Performance: Enbridge Energy Management, L.L.C. (EEQ), Digital Turbine, Inc. (APPS)

The shares of Enbridge Energy Management, L.L.C. have decreased by more than -24.81% this year alone. The shares recently went up by 2.94% or $0.28 and now trades at $9.82. The shares of Digital Turbine, Inc. (NASDAQ:APPS), has slumped by -2.23% year to date as of 04/16/2018. The shares currently trade at $1.75 and have been able to report a change of -8.85% over the past one week.

The stock of Enbridge Energy Management, L.L.C. and Digital Turbine, Inc. were two of the most active stocks on Monday. 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. These figures suggest that EEQ ventures generate a higher ROI than that of APPS.

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 debt ratio of EEQ is 0.00 compared to 0.13 for APPS. APPS can be able to settle its long-term debts and thus is a lower financial risk than EEQ.

Valuation



EEQ currently trades at a forward P/E of 29.31, a P/B of 982.00, while APPS trades at a P/B of 2.11, and a P/S of 1.24. This means that looking at the earnings, book values and sales basis, EEQ 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 EEQ is currently at a -10.73% to its one-year price target of 11.00. Looking at its rival pricing, APPS is at a -45.82% relative to its price target of 3.23.

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), EEQ is given a 3.30 while 1.60 placed for APPS. This means that analysts are more bullish on the outlook for EEQ 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 EEQ is 2.99 while that of APPS is just 5.06. This means that analysts are more bullish on the forecast for EEQ stock.

Conclusion

The stock of Enbridge Energy Management, L.L.C. defeats that of Digital Turbine, Inc. when the two are compared, with EEQ taking 5 out of the total factors that were been considered. EEQ 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, EEQ is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for EEQ is better on when it is viewed on short interest.

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