W&T Offshore, Inc. (NYSE:WTI) shares are up more than 106.95% this year and recently increased 4.90% or $0.32 to settle at $6.85. Inpixon (NASDAQ:INPX), on the other hand, is down -98.04% year to date as of 09/11/2018. It currently trades at $0.12 and has returned -14.78% during the past week.
W&T Offshore, Inc. (NYSE:WTI) and Inpixon (NASDAQ:INPX) are the two most active stocks in the Oil & Gas Drilling & Exploration industry based on today’s trading volumes. The market is clearly enthusiastic about both these stocks, but which is the better investment? To answer this, we will compare the two companies based on the strength of their growth, profitability, risk, returns, valuation, analyst recommendations, and insider trends.Growth
Companies that can consistently grow earnings at a high compound rate usually have the greatest potential to create value for shareholders in the long-run. Comparatively, INPX is expected to grow at a 20.00% annual rate. All else equal, INPX’s higher growth rate would imply a greater potential for capital appreciation.Profitability and Returns
A high growth rate isn’t necessarily valuable to investors. In fact, companies that overinvest in low return projects just to achieve a high growth rate can actually destroy shareholder value. Profitability and returns are a measure of the quality of a company’s business and its growth opportunities. We’ll use EBITDA margin and Return on Investment (ROI) to measure this. W&T Offshore, Inc. (WTI) has an EBITDA margin of 60.13%. This suggests that WTI underlying business is more profitableCash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. WTI’s free cash flow (“FCF”) per share for the trailing twelve months was +0.21. Comparatively, INPX’s free cash flow per share was -0.48. On a percent-of-sales basis, WTI’s free cash flow was 0.01% while INPX converted -0.05% of its revenues into cash flow. This means that, for a given level of sales, WTI is able to generate more free cash flow for investors.Liquidity and Financial Risk
Analysts look at liquidity and leverage ratios to assess how easily a company can cover its liabilities. WTI has a current ratio of 0.80 compared to 0.50 for INPX. This means that WTI can more easily cover its most immediate liabilities over the next twelve months.Valuation
WTI trades at a forward P/E of 9.69, and a P/S of 1.80, compared to a P/B of 0.69, and a P/S of 0.26 for INPX. WTI is the cheaper of the two stocks on book value basis but is expensive in terms of P/E 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
When investing it’s crucial to distinguish between price and value. As Warren Buffet said, “price is what you pay, value is what you get”. WTI is currently priced at a 3.32% to its one-year price target of 6.63.
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. WTI has a beta of 2.64 and INPX’s beta is 2.86. WTI’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. WTI has a short ratio of 3.76 compared to a short interest of 1.68 for INPX. This implies that the market is currently less bearish on the outlook for INPX.Summary
W&T Offshore, Inc. (NYSE:WTI) beats Inpixon (NASDAQ:INPX) on a total of 8 of the 13 factors compared between the two stocks. WTI is more profitable, generates a higher return on investment, has higher cash flow per share, has a higher cash conversion rate, higher liquidity and has lower financial risk. Finally, CDE has better sentiment signals based on short interest.