Earnings

A Comparison of Top Movers: Warrior Met Coal, Inc. (HCC), BofI Holding, Inc. (BOFI)

The shares of Warrior Met Coal, Inc. have increased by more than 41.91% this year alone. The shares recently went down by -3.52% or -$1.02 and now trades at $27.98. The shares of BofI Holding, Inc. (NASDAQ:BOFI), has jumped by 41.67% year to date as of 06/13/2018. The shares currently trade at $42.36 and have been able to report a change of -5.13% over the past one week.

The stock of Warrior Met Coal, Inc. and BofI Holding, Inc. 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.

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. HCC has an EBITDA margin of 24.95%, this implies that the underlying business of BOFI is more profitable. The ROI of HCC is 55.80% while that of BOFI is 23.30%. These figures suggest that HCC ventures generate a higher ROI than that of BOFI.

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, HCC’s free cash flow per share is a positive 14.45, while that of BOFI is positive 0.01.

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 debt ratio of HCC is 0.80 compared to 0.06 for BOFI. HCC can be able to settle its long-term debts and thus is a lower financial risk than BOFI.

Valuation

HCC currently trades at a forward P/E of 7.53, a P/B of 2.54, and a P/S of 1.16 while BOFI trades at a forward P/E of 13.45, a P/B of 2.96, and a P/S of 5.86. This means that looking at the earnings, book values and sales basis, HCC 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 HCC is currently at a -5.98% to its one-year price target of 29.76. Looking at its rival pricing, BOFI is at a -9.87% relative to its price target of 47.00.




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), HCC is given a 2.50 while 2.00 placed for BOFI. This means that analysts are more bullish on the outlook for HCC 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 HCC is 7.07 while that of BOFI is just 17.46. This means that analysts are more bullish on the forecast for HCC stock.

Conclusion

The stock of BofI Holding, Inc. defeats that of Warrior Met Coal, Inc. when the two are compared, with BOFI taking 5 out of the total factors that were been considered. BOFI 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, BOFI is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BOFI is better on when it is viewed on short interest.

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