The shares of Matador Resources Company have decreased by more than -16.77% this year alone. The shares recently went down by -0.08% or -$0.02 and now trades at $25.91. The shares of Sysco Corporation (NYSE:SYY), has jumped by 8.32% year to date as of 06/06/2018. The shares currently trade at $65.78 and have been able to report a change of -0.41% over the past one week.
The stock of Matador Resources Company and Sysco Corporation were two of the most active stocks on Wednesday. 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.Next 5Y EPS Growth: 30.00% versus 14.27%
When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that MTDR will grow it’s earning at a 30.00% annual rate in the next 5 years. This is in contrast to SYY which will have a positive growth at a 14.27% annual rate. This means that the higher growth rate of MTDR implies a greater potential for capital appreciation over the years.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. MTDR has an EBITDA margin of 63.79%, this implies that the underlying business of MTDR is more profitable. The ROI of MTDR is 12.70% while that of SYY is 13.50%. These figures suggest that SYY ventures generate a higher ROI than that of MTDR.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, MTDR’s free cash flow per share is a negative -0.02, while that of SYY is also a negative -0.2.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 MTDR is 0.70 and that of SYY is 1.40. This implies that it is easier for MTDR to cover its immediate obligations over the next 12 months than SYY. The debt ratio of MTDR is 0.47 compared to 3.62 for SYY. SYY can be able to settle its long-term debts and thus is a lower financial risk than MTDR.Valuation
MTDR currently trades at a forward P/E of 15.16, a P/B of 2.29, and a P/S of 5.28 while SYY trades at a forward P/E of 18.84, a P/B of 14.59, and a P/S of 0.59. This means that looking at the earnings, book values and sales basis, MTDR 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 MTDR is currently at a -29.65% to its one-year price target of 36.83. Looking at its rival pricing, SYY is at a 0.02% relative to its price target of 65.77.
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), MTDR is given a 1.90 while 2.40 placed for SYY. This means that analysts are more bullish on the outlook for SYY 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 MTDR is 6.92 while that of SYY is just 6.78. This means that analysts are more bullish on the forecast for SYY stock.
The stock of Sysco Corporation defeats that of Matador Resources Company when the two are compared, with SYY taking 6 out of the total factors that were been considered. SYY 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, SYY is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SYY is better on when it is viewed on short interest.