Ultra Petroleum Corp. (NASDAQ:UPL) shares are down more than -87.64% this year and recently decreased -8.20% or -$0.1 to settle at $1.12. Healthcare Trust of America, Inc. (NYSE:HTA), on the other hand, is down -6.99% year to date as of 12/04/2018. It currently trades at $27.94 and has returned 1.01% during the past week.
Ultra Petroleum Corp. (NASDAQ:UPL) and Healthcare Trust of America, Inc. (NYSE:HTA) are the two most active stocks based on recent trading volumes. We will compare the two companies based on the strength of various metrics, including growth, profitability, risk, return, and valuation to determine if one is a better investment than the other.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. Analysts expect UPL to grow earnings at a 20.40% annual rate over the next 5 years.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., compared to an EBITDA margin of 28.1% for Healthcare Trust of America, Inc. (HTA). UPL’s ROI is 52.00% while HTA has a ROI of 1.90%. The interpretation is that UPL’s business generates a higher return on investment than HTA’s.Cash Flow
The value of a stock is simply the present value of its future free cash flows. UPL’s free cash flow (“FCF”) per share for the trailing twelve months was +0.09. Comparatively, HTA’s free cash flow per share was -0.03. On a percent-of-sales basis, UPL’s free cash flow was 0% while HTA converted -0% of its revenues into cash flow. This means that, for a given level of sales, UPL is able to generate more free cash flow for investors.Valuation
UPL trades at a forward P/E of 2.82, and a P/S of 0.27, compared to a forward P/E of 87.86, a P/B of 1.73, and a P/S of 8.31 for HTA. UPL is the cheaper 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. UPL is currently priced at a -54.84% to its one-year price target of 2.48. Comparatively, HTA is -5.45% relative to its price target of 29.55. This suggests that UPL is the better investment over the next year.
Insider Activity and Investor Sentiment
Analysts often look at short interest, or the percentage of a company’s float currently being shorted by investors, to aid in their outlook for a particular stock. UPL has a short ratio of 6.92 compared to a short interest of 1.26 for HTA. This implies that the market is currently less bearish on the outlook for HTA.Summary
Ultra Petroleum Corp. (NASDAQ:UPL) beats Healthcare Trust of America, Inc. (NYSE:HTA) on a total of 11 of the 14 factors compared between the two stocks. UPL is growing fastly, is more profitable, generates a higher return on investment, has higher cash flow per share, higher liquidity and has lower financial risk. In terms of valuation, UPL is the cheaper of the two stocks on an earnings, book value and sales basis, UPL is more undervalued relative to its price target. Finally, TXN has better sentiment signals based on short interest.