QEP Resources, Inc. (NYSE:QEP) shares are up more than 18.81% this year and recently increased 0.89% or $0.1 to settle at $11.37. TrovaGene, Inc. (NASDAQ:TROV), on the other hand, is up 18.67% year to date as of 04/16/2018. It currently trades at $0.36 and has returned 13.29% during the past week.
QEP Resources, Inc. (NYSE:QEP) and TrovaGene, Inc. (NASDAQ:TROV) are the two most active stocks in the Oil & Gas Pipelines industry 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.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 Return on Investment (ROI) as measures of profitability and return. QEP’s ROI is 6.30% while TROV has a ROI of -349.40%. The interpretation is that QEP’s business generates a higher return on investment than TROV’s.Cash Flow
The amount of free cash flow available to investors is ultimately what determines the value of a stock. QEP’s free cash flow (“FCF”) per share for the trailing twelve months was -3.93. Comparatively, TROV’s free cash flow per share was -0.08. On a percent-of-sales basis, QEP’s free cash flow was -58.31% while TROV converted -0.87% of its revenues into cash flow. This means that, for a given level of sales, TROV is able to generate more free cash flow for investors.Liquidity and Financial Risk
Liquidity and leverage ratios provide insight into the financial health of a company, and allow investors to determine the likelihood that the company will be able to continue operating as a going concern. QEP has a current ratio of 0.30 compared to 2.40 for TROV. This means that TROV can more easily cover its most immediate liabilities over the next twelve months. QEP’s debt-to-equity ratio is 0.58 versus a D/E of 0.20 for TROV. QEP is therefore the more solvent of the two companies, and has lower financial risk.Valuation
QEP trades at a P/B of 0.72, and a P/S of 1.69, compared to a P/B of 2.28, and a P/S of 38.10 for TROV. 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
Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. QEP is currently priced at a -16.89% to its one-year price target of 13.68. Comparatively, TROV is -92% relative to its price target of 4.50. This suggests that TROV is the better investment over the next year.
Risk and Volatility
Analyst use beta to measure a stock’s volatility relative to the overall market. Stocks with a beta above 1 tend to have bigger swings in price than the market as a whole, the opposite being the case for stocks with a beta below 1. QEP has a beta of 1.57 and TROV’s beta is -0.11. TROV’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. QEP has a short ratio of 2.97 compared to a short interest of 2.57 for TROV. This implies that the market is currently less bearish on the outlook for TROV.Summary
TrovaGene, Inc. (NASDAQ:TROV) beats QEP Resources, Inc. (NYSE:QEP) on a total of 7 of the 14 factors compared between the two stocks. TROV generates a higher return on investment, has a higher cash conversion rate, higher liquidity and has lower financial risk. TROV is more undervalued relative to its price target. Finally, TROV has better sentiment signals based on short interest.