Earnings

Which is more compelling pick right now? – Fang Holdings Limited (SFUN), Keane Group, Inc. (FRAC)

The shares of Fang Holdings Limited have decreased by more than -36.56% this year alone. The shares recently went down by -5.09% or -$0.19 and now trades at $3.54. The shares of Keane Group, Inc. (NYSE:FRAC), has slumped by -29.88% year to date as of 07/05/2018. The shares currently trade at $13.33 and have been able to report a change of -2.98% over the past one week.

The stock of Fang Holdings Limited and Keane Group, Inc. were two of the most active stocks on Thursday. 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. The ROI of SFUN is 1.30% while that of FRAC is -0.50%. These figures suggest that SFUN ventures generate a higher ROI than that of FRAC.

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, SFUN’s free cash flow per share is a positive 0, while that of FRAC is positive 0.36.

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 SFUN is 1.30 and that of FRAC is 1.50. This implies that it is easier for SFUN to cover its immediate obligations over the next 12 months than FRAC. The debt ratio of SFUN is 0.88 compared to 0.55 for FRAC. SFUN can be able to settle its long-term debts and thus is a lower financial risk than FRAC.

Valuation

SFUN currently trades at a forward P/E of 10.76, a P/B of 2.12, and a P/S of 3.40 while FRAC trades at a forward P/E of 8.38, a P/B of 2.92, and a P/S of 0.83. This means that looking at the earnings, book values and sales basis, SFUN 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 SFUN is currently at a -34.44% to its one-year price target of 5.40. Looking at its rival pricing, FRAC is at a -37.86% relative to its price target of 21.45.




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), SFUN is given a 2.80 while 1.80 placed for FRAC. This means that analysts are more bullish on the outlook for SFUN 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 SFUN is 10.09 while that of FRAC is just 5.14. This means that analysts are more bullish on the forecast for FRAC stock.

Conclusion

The stock of Fang Holdings Limited defeats that of Keane Group, Inc. when the two are compared, with SFUN taking 2 out of the total factors that were been considered. SFUN 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, SFUN is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SFUN is better on when it is viewed on short interest.

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