JinkoSolar Holding Co., Ltd. (NYSE:JKS) shares are down more than -62.74% this year and recently decreased -2.71% or -$0.25 to settle at $8.96. Ferrellgas Partners, L.P. (NYSE:FGP), on the other hand, is down -53.27% year to date as of 10/11/2018. It currently trades at $2.00 and has returned 12.99% during the past week.
JinkoSolar Holding Co., Ltd. (NYSE:JKS) and Ferrellgas Partners, L.P. (NYSE:FGP) are the two most active stocks in the Semiconductor – Specialized 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.Growth
One of the key things investors look for in a company is the ability to grow earnings at a high compound rate over time. Comparatively, FGP is expected to grow at a 34.20% annual rate. All else equal, FGP’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. EBITDA margin of 0.52% for Ferrellgas Partners, L.P. (FGP). JKS’s ROI is 1.60% while FGP has a ROI of -7.40%. The interpretation is that JKS’s business generates a higher return on investment than FGP’s.Cash Flow
Earnings don’t always accurately reflect the amount of cash that a company brings in. On a percent-of-sales basis, JKS’s free cash flow was 0% while FGP converted -1.92% of its revenues into cash flow. This means that, for a given level of sales, JKS is able to generate more free cash flow for investors.Liquidity and Financial Risk
Liquidity and leverage ratios are important because they reveal the financial health of a company. JKS has a current ratio of 1.00 compared to 1.30 for FGP. This means that FGP can more easily cover its most immediate liabilities over the next twelve months.Valuation
JKS trades at a forward P/E of 18.71, a P/B of 0.32, and a P/S of 0.11, compared to a P/S of 0.10 for FGP. JKS is the expensive of the two stocks on an earnings, book value and sales basis. 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. JKS is currently priced at a -34.69% to its one-year price target of 13.72. Comparatively, FGP is -11.11% relative to its price target of 2.25. This suggests that JKS 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. JKS has a beta of 1.46 and FGP’s beta is 0.72. FGP’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. JKS has a short ratio of 14.06 compared to a short interest of 4.70 for FGP. This implies that the market is currently less bearish on the outlook for FGP.Summary
Ferrellgas Partners, L.P. (NYSE:FGP) beats JinkoSolar Holding Co., Ltd. (NYSE:JKS) on a total of 9 of the 14 factors compared between the two stocks. FGP generates a higher return on investment, is more profitable, higher liquidity and has lower financial risk. In terms of valuation, FGP is the cheaper of the two stocks on an earnings, book value and sales basis, Finally, FGP has better sentiment signals based on short interest.