Which Market Offer More Value? – Halcon Resources Corporation (HK), Cloud Peak Energy Inc. (CLD)

The shares of Halcon Resources Corporation have decreased by more than -32.10% this year alone. The shares recently went down by -3.56% or -$0.19 and now trades at $5.14. The shares of Cloud Peak Energy Inc. (NYSE:CLD), has slumped by -33.48% year to date as of 04/16/2018. The shares currently trade at $2.96 and have been able to report a change of -1.33% over the past one week.

The stock of Halcon Resources Corporation and Cloud Peak Energy 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. HK has an EBITDA margin of 141.71%, this implies that the underlying business of HK is more profitable. The ROI of HK is 59.80% while that of CLD is 4.60%. These figures suggest that HK ventures generate a higher ROI than that of CLD.

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, HK’s free cash flow per share is a negative -0.07.

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 HK is 3.10 and that of CLD is 2.30. This implies that it is easier for HK to cover its immediate obligations over the next 12 months than CLD. The debt ratio of HK is 0.00 compared to 0.40 for CLD. CLD can be able to settle its long-term debts and thus is a lower financial risk than HK.


HK currently trades at a forward P/E of 9.31, a P/B of 0.71, and a P/S of 2.15 while CLD trades at a P/B of 0.22, and a P/S of 0.25. This means that looking at the earnings, book values and sales basis, HK 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 HK is currently at a -51.33% to its one-year price target of 10.56. Looking at its rival pricing, CLD is at a -22.72% relative to its price target of 3.83.

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), HK is given a 2.10 while 3.10 placed for CLD. This means that analysts are more bullish on the outlook for CLD 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 HK is 4.86 while that of CLD is just 5.22. This means that analysts are more bullish on the forecast for HK stock.


The stock of Halcon Resources Corporation defeats that of Cloud Peak Energy Inc. when the two are compared, with HK taking 7 out of the total factors that were been considered. HK 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, HK is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for HK is better on when it is viewed on short interest.

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