Earnings

Which is more compelling pick right now? – Kulicke and Soffa Industries, Inc. (KLIC), Harmony Gold Mining Company Limited (HMY)

The shares of Kulicke and Soffa Industries, Inc. have increased by more than 13.87% this year alone. The shares recently went up by 6.58% or $1.71 and now trades at $27.71. The shares of Harmony Gold Mining Company Limited (NYSE:HMY), has slumped by -12.83% year to date as of 07/12/2018. The shares currently trade at $1.63 and have been able to report a change of -1.81% over the past one week.

The stock of Kulicke and Soffa Industries, Inc. and Harmony Gold Mining Company Limited 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.

Next 5Y EPS Growth: 12.00% versus 0.00%

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 KLIC will grow it’s earning at a 12.00% annual rate in the next 5 years. This is in contrast to HMY which will have a positive growth at a 0.00% annual rate. This means that the higher growth rate of KLIC 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. KLIC has an EBITDA margin of 17.02%, this implies that the underlying business of KLIC is more profitable. The ROI of KLIC is 12.90% while that of HMY is 1.00%. These figures suggest that KLIC ventures generate a higher ROI than that of HMY.

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, KLIC’s free cash flow per share is a positive 0, while that of HMY is positive 37.74.

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 KLIC is 5.30 and that of HMY is 2.20. This implies that it is easier for KLIC to cover its immediate obligations over the next 12 months than HMY. The debt ratio of KLIC is 0.02 compared to 0.09 for HMY. HMY can be able to settle its long-term debts and thus is a lower financial risk than KLIC.

Valuation

KLIC currently trades at a forward P/E of 12.57, a P/B of 2.22, and a P/S of 2.18 while HMY trades at a forward P/E of 6.52, a P/B of 0.33, and a P/S of 0.56. This means that looking at the earnings, book values and sales basis, HMY 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 KLIC is currently at a -12.86% to its one-year price target of 31.80. Looking at its rival pricing, HMY is at a -29.74% relative to its price target of 2.32.

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), KLIC is given a 2.20 while 3.00 placed for HMY. This means that analysts are more bullish on the outlook for HMY 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 KLIC is 1.61 while that of HMY is just 1.76. This means that analysts are more bullish on the forecast for KLIC stock.

Conclusion

The stock of Kulicke and Soffa Industries, Inc. defeats that of Harmony Gold Mining Company Limited when the two are compared, with KLIC taking 7 out of the total factors that were been considered. KLIC 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, KLIC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for KLIC is better on when it is viewed on short interest.

Previous ArticleNext Article

Related Post

Set Sail With Cerus Corporation (CERS), Agenus Inc... The shares of Cerus Corporation have increased by more than 88.46% this year alone. The shares recently went down by -5.91% or -$0.4 and now trades at...
Which of 2 stocks would appeal to long-term invest... The shares of ImmunoCellular Therapeutics, Ltd. have decreased by more than -88.29% this year alone. The shares of Verastem, Inc. (NASDAQ:VSTM), has j...
Taking Tally Of Public Service Enterprise Group In... The shares of Public Service Enterprise Group Incorporated have increased by more than 3.88% this year alone. The shares recently went down by -0.52% ...
Comparing Top Moving Stocks GTx, Inc. (GTXI), MACO... The shares of GTx, Inc. have decreased by more than -86.78% this year alone. The shares recently went up by 1.82% or $0.03 and now trades at $1.68. Th...
Which is more compelling pick right now? – Y... The shares of Yandex N.V. have decreased by more than -15.30% this year alone. The shares recently went down by -1.67% or -$0.47 and now trades at $27...