Finance

Comparing Symantec Corporation (SYMC) and Newmont Mining Corporation (NEM)

Symantec Corporation (NASDAQ:SYMC) shares are down more than -22.95% this year and recently increased 1.60% or $0.34 to settle at $21.62. Newmont Mining Corporation (NYSE:NEM), on the other hand, is down -1.04% year to date as of 07/12/2018. It currently trades at $37.13 and has returned -3.38% during the past week.

Symantec Corporation (NASDAQ:SYMC) and Newmont Mining Corporation (NYSE:NEM) are the two most active stocks in the Security Software & Services industry based on today’s trading volumes. Investors are clearly interested in the two names, but is one a better choice than the other? We will compare the two companies across growth, profitability, risk, valuation, and insider trends to answer this question.

Growth

The ability to consistently grow earnings at a high compound rate is a defining characteristic of the best companies for long-term investment. Analysts expect SYMC to grow earnings at a 10.56% annual rate over the next 5 years. Comparatively, NEM is expected to grow at a 9.49% annual rate. All else equal, SYMC’s higher growth rate would imply a greater potential for capital appreciation.

Profitability and Returns

Growth doesn’t mean much if it comes at the cost of weak profitability. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. , compared to an EBITDA margin of 29.47% for Newmont Mining Corporation (NEM). SYMC’s ROI is -0.60% while NEM has a ROI of 5.90%. The interpretation is that NEM’s business generates a higher return on investment than SYMC’s.

Cash Flow



The value of a stock is simply the present value of its future free cash flows. SYMC’s free cash flow (“FCF”) per share for the trailing twelve months was +0.29. Comparatively, NEM’s free cash flow per share was -0.08. On a percent-of-sales basis, SYMC’s free cash flow was 3.72% while NEM converted -0.58% of its revenues into cash flow. This means that, for a given level of sales, SYMC is able to generate more free cash flow for investors.

Liquidity and Financial Risk

Liquidity and leverage ratios measure a company’s ability to meet short-term obligations and longer-term debts. SYMC has a current ratio of 1.20 compared to 4.20 for NEM. This means that NEM can more easily cover its most immediate liabilities over the next twelve months. SYMC’s debt-to-equity ratio is 1.13 versus a D/E of 0.39 for NEM. SYMC is therefore the more solvent of the two companies, and has lower financial risk.

Valuation

SYMC trades at a forward P/E of 12.15, a P/B of 2.70, and a P/S of 2.76, compared to a forward P/E of 22.60, a P/B of 1.88, and a P/S of 2.64 for NEM. SYMC is the cheaper of the two stocks on an earnings basis but is expensive in terms of P/B and P/S ratio. 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

Just because a stock is cheaper doesn’t mean there’s more value to be had. In order to assess value we need to compare the current price to where it’s likely to trade in the future. SYMC is currently priced at a -27.79% to its one-year price target of 29.94. Comparatively, NEM is -16.84% relative to its price target of 44.65. This suggests that SYMC is the better investment over the next year.

Risk and Volatility

Beta is a metric that investors frequently use to analyze a stock’s systematic risk. A beta above 1 implies above average market volatility. Conversely, a stock with a beta below 1 is seen as less risky than the overall market. SYMC has a beta of 0.73 and NEM’s beta is 0.25. NEM’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment




The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the percentage of a stock’s tradable shares currently being shorted, captures what the market as a whole feels about a stock. SYMC has a short ratio of 1.86 compared to a short interest of 1.88 for NEM. This implies that the market is currently less bearish on the outlook for SYMC.

Summary

Newmont Mining Corporation (NYSE:NEM) beats Symantec Corporation (NASDAQ:SYMC) on a total of 8 of the 14 factors compared between the two stocks. NEM is growing fastly, generates a higher return on investment, higher liquidity and has lower financial risk. In terms of valuation, NEM is the cheaper of the two stocks on book value and sales basis, Finally, GFI has better sentiment signals based on short interest.

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