The shares of Newfield Exploration Company have decreased by more than -31.27% this year alone. The shares recently went down by -1.01% or -$0.22 and now trades at $21.67. The shares of Bausch Health Companies Inc. (NYSE:BHC), has jumped by 31.33% year to date as of 11/08/2018. The shares currently trade at $27.29 and have been able to report a change of 10.13% over the past one week.
The stock of Newfield Exploration Company and Bausch Health Companies 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.Next 5Y EPS Growth: 30.87% versus 6.95%
When a company is able to grow consistently in terms of earnings at a high compound rate have the highest likelihood of creating value for its shareholders over time. Analysts have predicted that NFX will grow it’s earning at a 30.87% annual rate in the next 5 years. This is in contrast to BHC which will have a positive growth at a 6.95% annual rate. This means that the higher growth rate of NFX implies a greater potential for capital appreciation over the years.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. NFX has an EBITDA margin of 43.14%, this implies that the underlying business of NFX is more profitable. The ROI of NFX is 13.40% while that of BHC is 9.80%. These figures suggest that NFX ventures generate a higher ROI than that of BHC.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, NFX’s free cash flow per share is a negative -1.47, while that of BHC is positive 1.68.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 NFX is 0.70 and that of BHC is 1.10. This implies that it is easier for NFX to cover its immediate obligations over the next 12 months than BHC. The debt ratio of NFX is 1.30 compared to 7.44 for BHC. BHC can be able to settle its long-term debts and thus is a lower financial risk than NFX.Valuation
NFX currently trades at a forward P/E of 4.71, a P/B of 2.32, and a P/S of 1.87 while BHC trades at a forward P/E of 7.51, a P/B of 2.76, and a P/S of 1.15. This means that looking at the earnings, book values and sales basis, NFX 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 NFX is currently at a -44.12% to its one-year price target of 38.78. Looking at its rival pricing, BHC is at a 4.96% relative to its price target of 26.00.
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), NFX is given a 2.10 while 2.90 placed for BHC. This means that analysts are more bullish on the outlook for BHC 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 NFX is 2.19 while that of BHC is just 2.93. This means that analysts are more bullish on the forecast for NFX stock.
The stock of Bausch Health Companies Inc. defeats that of Newfield Exploration Company when the two are compared, with BHC taking 5 out of the total factors that were been considered. BHC 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, BHC is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for BHC is better on when it is viewed on short interest.