Earnings

Cardinal Health, Inc. (CAH) is better stock pick than Hecla Mining Company (HL)

The shares of Cardinal Health, Inc. have decreased by more than -9.97% this year alone. The shares recently went down by -0.25% or -$0.14 and now trades at $55.16. The shares of Hecla Mining Company (NYSE:HL), has slumped by -1.26% year to date as of 05/14/2018. The shares currently trade at $3.92 and have been able to report a change of -1.01% over the past one week.

The stock of Cardinal Health, Inc. and Hecla Mining Company 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. CAH has an EBITDA margin of 1.95%, this implies that the underlying business of HL is more profitable. The ROI of CAH is 8.70% while that of HL is 0.70%. These figures suggest that CAH ventures generate a higher ROI than that of HL.

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, CAH’s free cash flow per share is a positive 0.41.

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 CAH is 1.10 and that of HL is 3.20. This implies that it is easier for CAH to cover its immediate obligations over the next 12 months than HL. The debt ratio of CAH is 1.27 compared to 0.37 for HL. CAH can be able to settle its long-term debts and thus is a lower financial risk than HL.

Valuation

CAH currently trades at a forward P/E of 10.41, a P/B of 2.29, and a P/S of 0.13 while HL trades at a forward P/E of 23.06, a P/B of 1.05, and a P/S of 2.73. This means that looking at the earnings, book values and sales basis, CAH 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 CAH is currently at a -23.1% to its one-year price target of 71.73. Looking at its rival pricing, HL is at a -21.13% relative to its price target of 4.97.




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), CAH is given a 2.80 while 2.60 placed for HL. This means that analysts are more bullish on the outlook for CAH 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 CAH is 4.38 while that of HL is just 3.76. This means that analysts are more bullish on the forecast for HL stock.

Conclusion

The stock of Cardinal Health, Inc. defeats that of Hecla Mining Company when the two are compared, with CAH taking 7 out of the total factors that were been considered. CAH 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, CAH is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for CAH is better on when it is viewed on short interest.

Previous ArticleNext Article

Related Post

Dissecting the Numbers for National Oilwell Varco,... National Oilwell Varco, Inc. (NYSE:NOV) shares are down more than -2.47% this year and recently decreased -0.03% or -$0.01 to settle at $35.13. Plug P...
Set Sail With 22nd Century Group, Inc. (XXII), GDS... The shares of 22nd Century Group, Inc. have decreased by more than -21.79% this year alone. The shares recently went down by -4.37% or -$0.1 and now t...
Should You Buy American Electric Power Company, In... American Electric Power Company, Inc. (NYSE:AEP) shares are up more than 22.52% this year and recently increased 0.16% or $0.12 to settle at $77.14. O...
Critical Comparison: The Goodyear Tire & Rubb... The Goodyear Tire & Rubber Company (NASDAQ:GT) shares are up more than 3.31% this year and recently increased 1.77% or $0.58 to settle at $33.38. ...
The Long Case For BGC Partners (BGCP) BGC Partners, Inc. (NASDAQ:BGCP) is in the highlights and many would want to know whether now might be a good time for it to present much upside. Now ...