The shares of Yamana Gold Inc. have decreased by more than -5.13% this year alone. The shares recently went down by -6.03% or -$0.19 and now trades at $2.96. The shares of ArQule, Inc. (NASDAQ:ARQL), has jumped by 202.42% year to date as of 06/15/2018. The shares currently trade at $4.99 and have been able to report a change of -6.38% over the past one week.
The stock of Yamana Gold Inc. and ArQule, Inc. were two of the most active stocks on Friday. 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: 16.03% versus 5.00%
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 AUY will grow it’s earning at a 16.03% annual rate in the next 5 years. This is in contrast to ARQL which will have a positive growth at a 5.00% annual rate. This means that the higher growth rate of AUY 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. These figures suggest that ARQL ventures generate a higher ROI than that of AUY.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 AUY is 1.10 and that of ARQL is 5.40. This implies that it is easier for AUY to cover its immediate obligations over the next 12 months than ARQL. The debt ratio of AUY is 0.42 compared to 0.00 for ARQL. AUY can be able to settle its long-term debts and thus is a lower financial risk than ARQL.Valuation
AUY currently trades at a forward P/E of 17.94, a P/B of 0.68, and a P/S of 1.52 while ARQL trades at a P/B of 45.36, and a P/S of 114.98. This means that looking at the earnings, book values and sales basis, AUY 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 AUY is currently at a -24.49% to its one-year price target of 3.92. Looking at its rival pricing, ARQL is at a -2.16% relative to its price target of 5.10.
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), AUY is given a 2.60 while 1.80 placed for ARQL. This means that analysts are more bullish on the outlook for AUY 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 AUY is 0.46 while that of ARQL is just 0.81. This means that analysts are more bullish on the forecast for AUY stock.
The stock of ArQule, Inc. defeats that of Yamana Gold Inc. when the two are compared, with ARQL taking 5 out of the total factors that were been considered. ARQL 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, ARQL is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for ARQL is better on when it is viewed on short interest.