Earnings

Comparing Valuation And Performance: Northern Dynasty Minerals Ltd. (NAK), Coupa Software Incorporated (COUP)

The shares of Northern Dynasty Minerals Ltd. have decreased by more than -61.58% this year alone. The shares recently went down by -4.43% or -$0.03 and now trades at $0.68. The shares of Coupa Software Incorporated (NASDAQ:COUP), has jumped by 64.89% year to date as of 05/17/2018. The shares currently trade at $51.48 and have been able to report a change of -4.63% over the past one week.

The stock of Northern Dynasty Minerals Ltd. and Coupa Software Incorporated were two of the most active stocks on Thuday. 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 NAK ventures generate a higher ROI than that of COUP.

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 NAK is 6.00 and that of COUP is 3.20. This implies that it is easier for NAK to cover its immediate obligations over the next 12 months than COUP. The debt ratio of NAK is 0.00 compared to 0.68 for COUP. COUP can be able to settle its long-term debts and thus is a lower financial risk than NAK.

Valuation



NAK currently trades at a P/B of 1.94, while COUP trades at a P/B of 11.73, and a P/S of 15.51. This means that looking at the earnings, book values and sales basis, NAK 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 NAK is currently at a -72.91% to its one-year price target of 2.51. Looking at its rival pricing, COUP is at a -3.25% relative to its price target of 53.21.

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), NAK is given a 2.00 while 2.10 placed for COUP. This means that analysts are more bullish on the outlook for COUP 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 NAK is 23.52 while that of COUP is just 4.51. This means that analysts are more bullish on the forecast for COUP stock.

Conclusion

The stock of Coupa Software Incorporated defeats that of Northern Dynasty Minerals Ltd. when the two are compared, with COUP taking 2 out of the total factors that were been considered. COUP 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, COUP is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for COUP is better on when it is viewed on short interest.

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