Halliburton Company (NYSE:HAL) shares are up more than 11.25% this year and recently increased 2.64% or $1.4 to settle at $54.37. Agilent Technologies, Inc. (NYSE:A), on the other hand, is down -5.05% year to date as of 05/17/2018. It currently trades at $63.59 and has returned -7.65% during the past week.

Halliburton Company (NYSE:HAL) and Agilent Technologies, Inc. (NYSE:A) are the two most active stocks in the Oil & Gas Equipment & Services 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.

**Growth**

The ability to grow earnings at a compound rate over time is a crucial determinant of investment value. Analysts expect HAL to grow earnings at a 20.40% annual rate over the next 5 years. Comparatively, A is expected to grow at a 10.69% annual rate. All else equal, HAL’s higher growth rate would imply a greater potential for capital appreciation.

**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., compared to an EBITDA margin of 24.48% for Agilent Technologies, Inc. (A). HAL’s ROI is 5.20% while A has a ROI of 10.60%. The interpretation is that A’s business generates a higher return on investment than HAL’s.

**Cash Flow**

The amount of free cash flow available to investors is ultimately what determines the value of a stock. HAL’s free cash flow (“FCF”) per share for the trailing twelve months was -0.10. Comparatively, A’s free cash flow per share was +0.33. On a percent-of-sales basis, HAL’s free cash flow was -0.42% while A converted 2.38% of its revenues into cash flow. This means that, for a given level of sales, A is able to generate more free cash flow for investors.

**Liquidity and Financial Risk**

Balance sheet risk is one of the biggest factors to consider before investing. HAL has a current ratio of 2.20 compared to 3.20 for A. This means that A can more easily cover its most immediate liabilities over the next twelve months. HAL’s debt-to-equity ratio is 1.30 versus a D/E of 0.47 for A. HAL is therefore the more solvent of the two companies, and has lower financial risk.

**Valuation**

HAL trades at a forward P/E of 16.10, a P/B of 5.69, and a P/S of 2.17, compared to a forward P/E of 21.23, a P/B of 4.54, and a P/S of 4.45 for A. 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

A cheap stock isn’t a good investment if the stock is priced accurately. To get a sense of “value” we must compare the current price to some measure of intrinsic value such as a price target. HAL is currently priced at a -11.22% to its one-year price target of 61.24. Comparatively, A is -20.44% relative to its price target of 79.93. This suggests that A is the better investment over the next year.

Risk and Volatility

To gauge the market risk of a particular stock, investors use beta. Stocks with a beta above 1 are more volatile than the market as a whole. Conversely, a beta below 1 implies below average systematic risk. HAL has a beta of 1.06 and A’s beta is 1.32. HAL’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. HAL has a short ratio of 1.91 compared to a short interest of 1.75 for A. This implies that the market is currently less bearish on the outlook for A.

**Summary**

Agilent Technologies, Inc. (NYSE:A) beats Halliburton Company (NYSE:HAL) on a total of 10 of the 14 factors compared between the two stocks. A is growing fastly, generates a higher return on investment, has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk. A is more undervalued relative to its price target. Finally, A has better sentiment signals based on short interest.