MetLife, Inc. (NYSE:MET) shares are down more than -4.71% this year and recently increased 0.61% or $0.29 to settle at $48.18. National Energy Services Reunited Corp. (NASDAQ:NESR), on the other hand, is up 1.81% year to date as of 05/17/2018. It currently trades at $10.13 and has returned 0.50% during the past week.
MetLife, Inc. (NYSE:MET) and National Energy Services Reunited Corp. (NASDAQ:NESR) are the two most active stocks in the Life Insurance industry based on today’s trading volumes. The market is clearly enthusiastic about both these stocks, but which is the better investment? To answer this, we will compare the two companies based on the strength of their growth, profitability, risk, returns, valuation, analyst recommendations, and insider trends.Growth
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Analysts expect MET to grow earnings at a 12.80% annual rate over the next 5 years.Profitability and Returns
Growth isn’t very attractive to investors if companies are sacrificing profitability and shareholder returns to achieve that growth. We will use EBITDA margin and Return on Investment (ROI), which control for differences in capital structure between the two companies, to measure profitability and return. MetLife, Inc. (MET) has an EBITDA margin of 8.5%. This suggests that MET underlying business is more profitableCash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. MET’s free cash flow (“FCF”) per share for the trailing twelve months was +0.84. Comparatively, NESR’s free cash flow per share was -0.04.Liquidity and Financial Risk
MET’s debt-to-equity ratio is 0.34 versus a D/E of 0.00 for NESR. MET is therefore the more solvent of the two companies, and has lower financial risk.
MET trades at a forward P/E of 8.84, a P/B of 0.89, and a P/S of 0.79, compared to a P/B of 1.33, for NESR. MET is the cheaper of the two stocks on book value basis but is expensive in terms of P/E and P/S ratio. 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
Just because a stock is cheaper doesn’t mean there’s more value to be had. In order to assess value we need to compare the current price to where it’s likely to trade in the future. MET is currently priced at a -11.9% to its one-year price target of 54.69.
Insider Activity and Investor Sentiment
Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. MET has a short ratio of 2.08 compared to a short interest of 0.02 for NESR. This implies that the market is currently less bearish on the outlook for NESR.Summary
National Energy Services Reunited Corp. (NASDAQ:NESR) beats MetLife, Inc. (NYSE:MET) on a total of 7 of the 12 factors compared between the two stocks. NESR is growing fastly and has lower financial risk. In terms of valuation, NESR is the cheaper of the two stocks on an earnings and sales basis, Finally, NESR has better sentiment signals based on short interest.