Alliance One International, Inc. (NYSE:AOI) shares are up more than 80.75% this year and recently increased 36.47% or $6.4 to settle at $23.95. Camber Energy, Inc. (NYSE:CEI), on the other hand, is down -93.78% year to date as of 09/11/2018. It currently trades at $0.19 and has returned -20.63% during the past week.
Alliance One International, Inc. (NYSE:AOI) and Camber Energy, Inc. (NYSE:CEI) are the two most active stocks in the Tobacco Products, Other industry based on today’s trading volumes. To determine if one is a better investment than the other, we will compare the two companies’ growth, profitability, risk, return, and valuation characteristics, as well as their analyst ratings and sentiment signals.Profitability and Returns
Just, if not more, important than the growth rate is the quality of that growth. Growth can actual be harmful to investors if it comes at the cost of weak profitability and low returns. To adjust for differences in capital structure we’ll use EBITDA margin and Return on Investment (ROI) as measures of profitability and return. Alliance One International, Inc. (AOI) has an EBITDA margin of 8.96%. This suggests that AOI underlying business is more profitable AOI’s ROI is 7.00% while CEI has a ROI of -209.70%. The interpretation is that AOI’s business generates a higher return on investment than CEI’s.Cash Flow
If there’s one thing investors care more about than earnings, it’s cash flow. AOI’s free cash flow (“FCF”) per share for the trailing twelve months was -31.15. Comparatively, CEI’s free cash flow per share was -0.21. On a percent-of-sales basis, AOI’s free cash flow was -15.25% while CEI converted -0.12% of its revenues into cash flow. This means that, for a given level of sales, CEI 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. AOI has a current ratio of 1.80 compared to 0.00 for CEI. This means that AOI can more easily cover its most immediate liabilities over the next twelve months.Valuation
AOI trades at a P/B of 0.82, and a P/S of 0.12, compared to a P/S of 1.28 for CEI. AOI is the cheaper of the two stocks on sales basis but is expensive in terms of P/E and P/B 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
Investors often compare a stock’s current price to an analyst price target to get a sense of the potential upside within the next year. AOI is currently priced at a 299.17% to its one-year price target of 6.00. Comparatively, CEI is -81% relative to its price target of 1.00. This suggests that CEI is the better investment over the next year.
Risk and Volatility
Beta is an important measure that gives investors a sense of the market risk associated with a particular stock. A beta above 1 signals above average market risk, while a beta below 1 implies below average volatility. AOI has a beta of 0.40 and CEI’s beta is 0.96. AOI’s shares are therefore the less volatile of the two stocks.Insider Activity and Investor Sentiment
Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. AOI has a short ratio of 3.42 compared to a short interest of 0.36 for CEI. This implies that the market is currently less bearish on the outlook for CEI.Summary
Camber Energy, Inc. (NYSE:CEI) beats Alliance One International, Inc. (NYSE:AOI) on a total of 6 of the 14 factors compared between the two stocks. CEI is more profitable, has a higher cash conversion rate and has lower financial risk. CEI is more undervalued relative to its price target. Finally, CEI has better sentiment signals based on short interest.