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Critical Comparison: One Horizon Group, Inc. (OHGI) vs. Comstock Mining Inc. (LODE)

One Horizon Group, Inc. (NASDAQ:OHGI) shares are down more than -81.06% this year and recently increased 6.08% or $0.02 to settle at $0.27. Comstock Mining Inc. (NYSE:LODE), on the other hand, is down -39.74% year to date as of 10/11/2018. It currently trades at $0.23 and has returned 5.62% during the past week.

One Horizon Group, Inc. (NASDAQ:OHGI) and Comstock Mining Inc. (NYSE:LODE) are the two most active stocks in the Application Software industry based on today’s trading volumes. Investor interest in the two stocks is clearly very high, but which is the better investment? To answer this question, we will compare the two companies across growth, profitability, risk, and valuation metrics, and also examine their analyst ratings and insider activity trends.

Cash Flow

The amount of free cash flow available to investors is ultimately what determines the value of a stock. OHGI’s free cash flow (“FCF”) per share for the trailing twelve months was -0.02. Comparatively, LODE’s free cash flow per share was -0.02. On a percent-of-sales basis, OHGI’s free cash flow was -0.16% while LODE converted -1.14% of its revenues into cash flow. This means that, for a given level of sales, OHGI 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. OHGI has a current ratio of 3.70 compared to 4.80 for LODE. This means that LODE can more easily cover its most immediate liabilities over the next twelve months. OHGI’s debt-to-equity ratio is 0.06 versus a D/E of 0.85 for LODE. LODE is therefore the more solvent of the two companies, and has lower financial risk.

Valuation

OHGI trades at a P/B of 0.72, and a P/S of 14.57, compared to a P/B of 1.17, and a P/S of 140.11 for LODE. 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. OHGI is currently priced at a -94.63% to its one-year price target of 5.03.

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. OHGI has a beta of 2.55 and LODE’s beta is -0.68. LODE’s shares are therefore the less volatile of the two stocks.

Insider Activity and Investor Sentiment

Comparing the number of shares sold short to the float is a method analysts often use to get a reading on investor sentiment. OHGI has a short ratio of 0.25 compared to a short interest of 0.81 for LODE. This implies that the market is currently less bearish on the outlook for OHGI.

Summary

One Horizon Group, Inc. (NASDAQ:OHGI) beats Comstock Mining Inc. (NYSE:LODE) on a total of 7 of the 13 factors compared between the two stocks. OHGI generates a higher return on investment, has a higher cash conversion rate and has lower financial risk. In terms of valuation, OHGI is the cheaper of the two stocks on book value and sales basis, Finally, OHGI has better sentiment signals based on short interest.

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