The shares of LKQ Corporation have decreased by more than -29.53% this year alone. The shares recently went up by 0.95% or $0.27 and now trades at $28.66. The shares of Whiting Petroleum Corporation (NYSE:WLL), has jumped by 33.61% year to date as of 11/08/2018. The shares currently trade at $35.38 and have been able to report a change of -1.61% over the past one week.
The stock of LKQ Corporation and Whiting Petroleum Corporation 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. LKQ has an EBITDA margin of 10.73%, this implies that the underlying business of WLL is more profitable. The ROI of LKQ is 7.10% while that of WLL is -12.70%. These figures suggest that LKQ ventures generate a higher ROI than that of WLL.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, LKQ’s free cash flow per share is a positive 1.4, while that of WLL is negative -4.49.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 LKQ is 2.60 and that of WLL is 0.60. This implies that it is easier for LKQ to cover its immediate obligations over the next 12 months than WLL. The debt ratio of LKQ is 0.94 compared to 0.70 for WLL. LKQ can be able to settle its long-term debts and thus is a lower financial risk than WLL.Valuation
LKQ currently trades at a forward P/E of 11.35, a P/B of 1.90, and a P/S of 0.80 while WLL trades at a forward P/E of 7.82, a P/B of 0.79, and a P/S of 1.62. This means that looking at the earnings, book values and sales basis, LKQ 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 LKQ is currently at a -28.6% to its one-year price target of 40.14. Looking at its rival pricing, WLL is at a -40% relative to its price target of 58.97.
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), LKQ is given a 1.50 while 2.20 placed for WLL. This means that analysts are more bullish on the outlook for WLL 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 LKQ is 3.40 while that of WLL is just 2.92. This means that analysts are more bullish on the forecast for WLL stock.
The stock of Whiting Petroleum Corporation defeats that of LKQ Corporation when the two are compared, with WLL taking 6 out of the total factors that were been considered. WLL 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, WLL is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for WLL is better on when it is viewed on short interest.