The shares of Murphy Oil Corporation have increased by more than 14.20% this year alone. The shares recently went up by 11.61% or $3.69 and now trades at $35.46. The shares of Oasis Petroleum Inc. (NYSE:OAS), has jumped by 42.33% year to date as of 10/11/2018. The shares currently trade at $11.97 and have been able to report a change of -13.45% over the past one week.
The stock of Murphy Oil Corporation and Oasis Petroleum Inc. 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. MUR has an EBITDA margin of 47.13%, this implies that the underlying business of MUR is more profitable. The ROI of MUR is 2.80% while that of OAS is 3.20%. These figures suggest that OAS ventures generate a higher ROI than that of MUR.Cash Flow
The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, MUR’s free cash flow per share is a negative -1.71, while that of OAS is positive 1.53.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 MUR is 1.50 and that of OAS is 0.50. This implies that it is easier for MUR to cover its immediate obligations over the next 12 months than OAS. The debt ratio of MUR is 0.62 compared to 0.80 for OAS. OAS can be able to settle its long-term debts and thus is a lower financial risk than MUR.Valuation
MUR currently trades at a forward P/E of 15.10, a P/B of 1.31, and a P/S of 2.71 while OAS trades at a forward P/E of 12.61, a P/B of 1.09, and a P/S of 2.42. This means that looking at the earnings, book values and sales basis, OAS 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. The price of MUR is currently at a 7.45% to its one-year price target of 33.00. Looking at its rival pricing, OAS is at a -24.57% relative to its price target of 15.87.
When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), MUR is given a 3.30 while 2.30 placed for OAS. This means that analysts are more bullish on the outlook for MUR stocks.Insider Activity and Investor Sentiment
Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for MUR is 10.42 while that of OAS is just 6.50. This means that analysts are more bullish on the forecast for OAS stock.
The stock of Murphy Oil Corporation defeats that of Oasis Petroleum Inc. when the two are compared, with MUR taking 3 out of the total factors that were been considered. MUR 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, MUR is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for MUR is better on when it is viewed on short interest.