Earnings

Set Sail With Pinduoduo Inc. (PDD), Viper Energy Partners LP (VNOM)

The shares of Pinduoduo Inc. have decreased by more than -25.09% this year alone. The shares recently went down by -1.33% or -$0.27 and now trades at $20.00. The shares of Viper Energy Partners LP (NASDAQ:VNOM), has jumped by 63.44% year to date as of 08/09/2018. The shares currently trade at $38.13 and have been able to report a change of 6.90% over the past one week.

The stock of Pinduoduo Inc. and Viper Energy Partners LP 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 PDD is 60.00% while that of VNOM is 11.30%. These figures suggest that PDD ventures generate a higher ROI than that of VNOM.

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 PDD is 1.60 and that of VNOM is 21.60. This implies that it is easier for PDD to cover its immediate obligations over the next 12 months than VNOM.

Valuation



PDD currently trades at a P/S of 52.19 while VNOM trades at a forward P/E of 20.61, a P/B of 4.89, and a P/S of 20.87. This means that looking at the earnings, book values and sales basis, VNOM 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. Looking at its rival pricing, VNOM is at a 0.87% relative to its price target of 37.80.

Conclusion




The stock of Viper Energy Partners LP defeats that of Pinduoduo Inc. when the two are compared, with VNOM taking 4 out of the total factors that were been considered. VNOM 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, VNOM is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for VNOM is better on when it is viewed on short interest.

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